It was a mistake to dump DLC and BG4, but no hard-core Larian fans want to hear it.
I feel like right now it's more appropriate to say it's a "risk" to dump DLC/BG4, rather than a "mistake", because we don't know what they're going to do next, and it's guaranteed that whatever their next game is, if it's a CRPG or story RPG (which it probably will be), it's going to have a huge number of people buying because "Larian are the BG3 guys!".
I mean, it certainly is an interesting risk to take. Even if the way they'd designed BG3 made DLC for that impractical or even basically impossible, BG4, using the same engine, the same fundamental technologies, the same writing style, probably a largely new cast but with cameos (or having the companions as quest-givers etc.) from the previous game, would have been a pretty guaranteed success, and would also likely have been possible to develop in 3-4 years (given they'd already been in pre-production on it for at least 7 months, possibly a year or more), even if a similar scale to BG3. Would it have sold as many copies? Hard to say, RPG sequels usually sell more, but not always (see Pillars of Eternity 2: Deadfire, and its bizarre failure, despite being a better game than the original Pillars on literally every possible level, from gameplay to UI to writing to pacing). But I think it's fair to say they'd have made hundreds of millions again, and probably on a lower overhead.
One possible issue is that WotC might have been wanting a significantly larger revenue cut, but we have absolutely zero evidence to even
hint at that, so that is 100% pure baseless speculation and not worth much consideration.
Anyway, whatever exactly happened at Larian, it was enough to turn down a guaranteed hundreds of millions in favour of betting on their own prowess and competence.
Whether that turns out to be a "mistake", we'll likely find out when their next game comes out (we might find out in Early Access - but they turned around BG3 from "DOS2 but technically set in Faerun" - even the gameplay was more DOS-like - to a real D&D game during EA so I suspect not).
They will have to contend with all their worst tendencies with no counter balancing factors.
This is true. I think how this actually works out for them will be interesting to see. The two possible ways they do well I think are:
1) They pick a setting where being grimdark AF actually totally works with the setting, and thus even though it's blood-soaked trust-no-one murderama, that's actually fine. For example, if they did a grimy, dystopian space-future type setting, I think they could go pretty much as hard as they went in DOS2 with everyone being awful or a victim, constant edgelord-adjacent "dark humour" and so on, and they'd probably still do extremely well. Same for a cyberpunk or dark steampunk setting, actually. If they go more classical fantasy, even if they try to go dark fantasy or even use the Divinity setting, I think they'll have more of a problem.
2) Someone manages to throw the brakes, whether it's Swen coming to his senses - unlikely - or being brought to his senses by his obviously talented and intelligent lead writers (Adam Smith and Chrystal Ding - both of whom this was the first game they'd ever written on*, and who did a far better job than most experienced leads!) - I think that's a little more likely - and they actually cut down the "blood blood blood" a bit, but still manage to do convincing evil options and so on. If they do that, I think they could succeed with almost any setting/genre of RPG.
What makes me think they probably aren't making an actual "mistake" though is that Larian has shown a lot of flexibility over writing before. Sure, prior to BG3, all their games were pretty grimdark (with a lot of often slightly forced or clumsy "humour" - indeed prior to DOS2 it was often tinged with thoughtless misogyny or cruelty), but with DOS2 they knew the writing wasn't good enough, despite basically no reviews saying that. They knew they needed to hire English-speaking writers to do better (and this really impressed me because one of my main critiques of a lot of the humour and some of the writing in DOS1 and 2 was that it felt like it had been poorly translated). They knew they had to replace their lead writer - and they did, the guy who had lead writer on all their games since 2009 stepped aside for Smith and Ding, and became just one of the team of "principal writers" - that's wild - there are a lot of studios which wouldn't even try that after a critical drubbing, let alone put out a successful game and then still see their own flaws and take decisive action on them! Further, sure when BG3 EA started, it was way too DOS-esque, including writing-wise, but when they got a ton of negative feedback, the writers and designers didn't really push back - they listened. Swen did make some excuses and apologia ("these are only the evil companions!**" and so on). So I think whilst Swen loves that grimdark and "dark humour", the writing on the next game will probably be pretty well-judged, if still a little on the darker side.
* = It's wild that Chrystal Ding even came to work there. She seemingly had a great time working on BG3, but is a pretty serious research-lead artist, a lot of her work focusing on the impact of trauma on identity - a huge theme in BG - most of the companions and major antagonists have a lot of that. She's also very interested in the impact of technology on identity, which might point to a major theme for a future game. Adam Smith used to be a games journalist at Rock Paper Shotgun, and was always talented there, and joined Larian when they were hiring a lot of writers after WotC told them they had the go-ahead to make BG3.
** = This seems like it was maybe true at the time, but only one "good" full/origin companion was actually added after that time - Karlach. Datamining suggests there were two others planned - Helia, a Halfling Bard with Lycanthropy, and Minsc was originally a full origin companion - i.e. who you could play from the start, romance people with, and so on - I strongly suspect WotC ended up nixing that one. There also seemed to be a Paladin origin character but they seem to have been cut pretty early in favour of Minthara being able to join. Conversely, Halsin wasn't originally intended to be a companion at all.