If anything making games is either costing the same or is getting cheaper, despite the fact that they the look better and can contain a lot more content then games a decade ago. Why? Because game engines are getting easier to work with. Look at UE3, that engine has taken a off a lot of the work load that which is then put back into making the game. Also, because these newer game engines are doing this, and since no one really wants to re-invent the wheel, other game companies are just leasing these game engines and saving a bundle by simply modifying them to suit their needs (after TW makes it's UE3 game do you really think they will even bother to make their own game engine? Hell no they would lease UE3.5, UE4, or whoever had the engine that they wanted). The gaming industry is making money growing, not falling on hard times and about to go bankrupt.
Ads ingame are not needed. I think Valve moved in this direction to force people to move to Source, the Half-Life community is always stuck in the past ("I want WON back!"). So they simply played the card that would make the CS 1.6 community fold. I believe this new ad supported version of CS 1.6 will be free to anyone that owns any game availible on steam (so even if you bought Dark Messiah, you could play CS 1.6). It will most likely end there, Valve wants players to support CS: S so there is pretty much a 100% chance they wont even think about putting ads in it till CS 2 is being sold (if the planned ads for CS 1.6 even work, hard to get advertisements in a game no one plays).