That might be true if you’re being well paid. Game devs tend to be less well paid on average than people with equivalent skills in other tech businesses. And if you’ve been putting in unpaid overtime to finish a game, which is rampant in the industry, or if your friends in other game companies get royalties, then in both cases there actually is an immediate monetary downside to having a flop.

Anyway, “insane” is a pretty strong word considering profit sharing is super common in all kinds of industries. Some people and some companies really do try to share a little bit of the wealth and reward and retain talented employees, not all company owners are out to keep every cent for themselves.