I don't think he's trashing them for focusing on graphics so much as the industry's turn to be more Hollywood-esque, like having so much emphasis on huge multi-million budget titles etc.
When that is the situation publisher's will want something that's easier to justify giving that money to, i.e. big name titles[read sequels], or licensed titles and so on.
See Haze for this, much of FRD's resources would have gone into this and the fact that it then fails puts the company in a terrible position, and harder to get deals to make other games for publishers, despite the other great work they've already done for the industry.

This leads to new unproven ideas being harder to get off the ground and if it does eventually get out seeing not so stellar sales as the market is saturated with well known brand names, case in point being LBP (i'm not saying the sales were bad) compared to other games that are just the yearly iteration of a franchise. I think in today's industry it would be a lot harder to justify Mario 64's change to 3D (assuming of course we were all still running around in the 2nd dimension but you get where I'm going).