The first viewpoint is typically more accurate for the game industry at large I think, but it really depends on the developer and the level of clout they have. I've always found it ironic that a developer is reliant upon their player base to generate sales, but once they reach a certain point they can completely ignore their player base's wants and expectations and do whatever the hell they please, because a significant portion of their player base will buy their games anyway irrespective of their quality or whether they meet their expectations or not. Nintendo, Game Freak, Square Enix, Bandai Namco, Capcom; all those big name companies that everyone knows can more or less do as they please with their games. There comes a point where just "make another one" is the only expectation that really matters...and in fairness, that's the only expectation any developer really CAN meet, because you can't please everyone and when your sales number in the millions you're inevitably going to piss a few people off. Playing it safe and just doing more is a great way of acting like you're listening whilst not actually listening at all.
The funny thing is that if you DON'T have the kind of clout where you can ignore your player base and trust they'll lap up whatever you throw at them, you have the freedom to make what you want anyway in the hopes of attracting a smaller audience. I know very little about the indie game scene but I know just from looking and what I've played that you get more experimentation and creativity from there than anywhere else, and that is only possible because there are no expectations to begin with. It's only once you've got that audience when you're a smaller developer that you really need to take that feedback on board, or if you're doing a Kickstarter or something. But just because it's a good idea to do it doesn't mean that you HAVE to do it.
In fact, I would say the only games where consumer opinion truly matters in the sense that it becomes an obligation to cater to it is in live service games, F2P titles, and MMOs, i.e. ones that are heavily dependent on continued community engagement, rather than one-time sales. If you want to keep your player base, then of course you're going to need to listen to them to some extent and provide new content for them to engage with. You can argue this is the case for standalone titles as well, but it's not quite the same thing - those are typically a single purchase and that's it. DLC is made out of a desire for additional revenue rather than it is to cater to player demands/expectations (although an expectation of DLC is practically built-in now, which I'm sure delights many companies) and even if it's common, it is by no means mandatory. Patches and fixes are more about goodwill and reputation than anything else: if you make a pretence of listening or at least acknowledging your game isn't perfect, people are more likely to buy your products in the future. Because bugs are often heavily publicised when they're noticeable, numerous, or game-breaking. But that's not so much listening to your player base as it is correcting defects in your product.
Whether or not having the only expectation met of "just doing more" is unsustainable or not depends, again, on the game, and how you measure success. Going by the sales of bigger series would suggest that it most certainly isn't, but the landscape of gaming has changed quite a bit - games cost more, DLC is now very common, and more people are gaming than there used to be. If there IS going to be a downward trend as the industry stagnates and people get bored of series that rehash the same idea over and over without taking feedback on that idea into account, it's not going to show up for at least another decade or two...and there are plenty of other factors that determine a game's success besides this. Pokemon is a great series to look at here, as the sales were declining generation-by-generation until Sword and Shield...which is still just more of the same, but it's on the Nintendo Switch, which has been massively successful. I highly doubt they would have done as well on the Wii U. Hardware can drive software sales just as much sometimes.