Open source projects are increasing:
Why people choose open source:
FOSS as a development method has proven itself already. It has proven that it is capable of producing equal or even better quality software than proprietary. Why game developers haven't embraced FOSS, remains a subject of speculation - perhaps too many game developers are stuck with old business models, or perhaps there aren't enough game developers who are familiar with FOSS (or vice versa) - it's however clear that the lack of FOSS game development isn't because of any inherent flaw in FOSS itself. Personally I think it's just a matter of time and the matter will correct itself eventually.
I could see a FOSS game engine working if enough game publishers invested some time and money to it - kind of like how businesses who make money from Linux invest time and money to the Linux kernel. The core game engine would be FOSS, and the companies would be free to release their games with proprietary game data and art assets, or use some other business model, everyone would win.