Its all about money. It has NOTHING to do with with giving the consumer the option of opting out of the game if the first episode is crap.
Your first point is right. Your second is technically right but is missing the point entirely. It's simple business sense. Try to give the consumers what they want in return for money.
The simple fact of the matter is that Ritual may not have been able to even make the game if not delivered episodically. You have any idea how much money it takes to hire a team of people to produce a full-fledged AAA title, as well as all the money that changes hands to get something on the shelves of retail stores? It is ridiculously hard to get publishers to sign on to do a project for IP that they don't own, or to self-publish a title. It's not about making profit at the end of the development cycle, but simply staying in business long enough to actually put something out there!
The wonderful thing about episodic content is that it allows companies like Ritual who aren't sitting on mountains of money like id or Ensemble to actually take the initiative to put out the game that they
want to make, as opposed to whatever franchise EA or whoever wants to shovel out to the consumer. If it sells well and makes money, the developer can put out more goodness for the consumers to play
. If it flops, it's not as big of a deal as losing a multimillion dollar investment on a 2 year development cycle.
Oh, and this point:
You won't even get the OPTION of paying 50-60 bucks to be able to play the game all the way through at your leisure. Oh, that sounds awesome. Morons.
That's the way it is in pretty much EVERY OTHER MEDIA OUTLET IMAGINABLE. Read Harry Potter? Watch Star Wars? Watch CSI? Read manga? Pretty much everywhere you look there is serialized/episodic content out there and it simply works. You wouldn't expect to get the entire season of Family Guy or 24 on DVD before the show finishes airing do you? There's a very good reason for that.
Yes, it's hard, but I think Ritual may be on to something here that people don't realize that they wanted all along.