OTOH these innovations in creating artificial scarcity is what enabled the games to be funded in the first place. At least this way they exist, and can (and will!) be rescued by the hackers of the world.
EDIT: it's impossible to make money off of digital goods without artificial scarcity. This is because data is naturally not scarce. In the beginning, physical media allowed data goods to piggy-back on the retail structures already in place. Personal computing and the internet has mostly eliminated that form of scarcity. New forms of scarcity have been invented, some better than others (from the end-user perspective). Note that this truth applies to FAANG as well. Facebook and Google's fortunes have been built on the scarcity of ad space. Gaming companies have invented ways to create scarcity ranging from account-bound DRM (Steam, Battle.net), dongles, and always-on phone-home requirement for the runtime. And more. All of these technologies exist to extract money from something that is naturally not scarce. And rather than hate that fact, consider that without the ability to extract monetary value, these projects would not have been executed in the first place. So what's worse: a world in which we have excellent games hobbled by money extraction mechanisms, or a world in which we don't have excellent games? I know which one I prefer.
That view of things denies the possibility that people would have found alternative solutions to problems if the abusive solution didn't exist. In a word, it's short-sighted. Competition tends to drive otherwise viable strategies to extinction if a much easier one exists, and getting rid of that dominant strategy can allow alternative strategies to thrive.
The production costs of digital goods are naturally scarce. We "just" haven't (yet) figured out a good way to compensate people for those, so we turn to artificial scarcity.
That is a speculative argument, not data. While games haven't increased in price the addressable market is exponentially larger. In fact they have probably benefited from keeping the price low.
The reason you see alternative monetization is because it is so damn profitable, not because it is needed simply to fund the games. Look at Warzone, brings in $5.2M per day. There are countless other examples.
Investors want to go where there is maximum profit. But that doesn't mean we need these schemes just for the games to exist.
I think the other reason, besides micotransactions being more profitable, is it's just a better business model for most companies. Having a reasonably predictable regular income is preferable to a one off hit or miss of a single player AAA game.
Companies like Sony still do it, but Sony gets a cut of every transaction on their platform, so they have their regular income as well.
Microsoft has sort of figured out a solution with gamepass where they can make large offers to devs in order to minimise their risk.
If the data is not visible, for an outsider there is no difference between someone making something up and someone making a well-founded argument. Given historical examples, it is more reasonable to assume they are making stuff up. This is what the industry as a whole has always done.
Modern AAA games are incredibly expensive. This isn't a few devs doing late nights for a few months, it's hundreds of designers, artists, level designers, developers, testers, marketers, and more for long timelines. All of those people need plenty of hardware, and they all collect salaries and (hopefully) benefits.
You can't just quit your day job, live off your savings for a bit, and make a game like this. You need a big team with funding set up ahead of time, and that finding won't be released - either by external investors or management at a studio - unless you expect to make a return on that investment.
"Artificial scarcity" - which here is code for in-game ads and DRM - helps encourage people to purchase the game and guarantees revenue even in pirated copies. It doesn't mean guaranteeing the game will eventually break, but it does mean guaranteeing it will get a certain number of sales/revenue for a period of time.
I was active in gaming in the early-mid CD-ROM era and saw this in practice. If something can be trivially pirated (copy the files on the disc to a new one) it will be copied like wildfire. If it takes a bit more effort (bad sectors that make naive copying fail, etc.) then piracy won't go away but will become rarer. As the effort to pirate becomes more intense, if buying it is easier people will. If ads let you drop the price to a point where it's more affordable, more people will choose to pay it. Etc.
Games are also in a weird position compared to other things that are expensive to develop, because a large fraction of their target market either doesn't have a lot of disposable income. Adult gamers with lots of money are probably not abundant enough to justify raising prices.
That said, I'm not sure "artificial scarcity" is the right way to think about this. No company is making money off of five year old games. The fact that they connect to an ad server has nothing to do with creating artificial scarcity, it's just another revenue stream for the game company.
Speak to some gamedevs at various sizes of studios. You'll hear stories like "We can make this game with ads/microtransactions/DLC to fund part of the development, or we can not make this game at all due to lack of funding."
EDIT: it's impossible to make money off of digital goods without artificial scarcity. This is because data is naturally not scarce. In the beginning, physical media allowed data goods to piggy-back on the retail structures already in place. Personal computing and the internet has mostly eliminated that form of scarcity. New forms of scarcity have been invented, some better than others (from the end-user perspective). Note that this truth applies to FAANG as well. Facebook and Google's fortunes have been built on the scarcity of ad space. Gaming companies have invented ways to create scarcity ranging from account-bound DRM (Steam, Battle.net), dongles, and always-on phone-home requirement for the runtime. And more. All of these technologies exist to extract money from something that is naturally not scarce. And rather than hate that fact, consider that without the ability to extract monetary value, these projects would not have been executed in the first place. So what's worse: a world in which we have excellent games hobbled by money extraction mechanisms, or a world in which we don't have excellent games? I know which one I prefer.