I've seen entire game studios get caught up in a "manic depression" style of game development. They crunch for X days a week/month, and during their non-crunch time devs still come in but don't get much done. It's totally possible to push an entire studio in this direction.
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Crunch-based studios also push their developers into drugs, alcohol, or caffeine addiction. Sometimes the added chronic stress causes physical illnesses such as IBS, etc. Unhealthy employees take more sickdays leading to more crunching.
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I would argue that crunch-based studios are fragile systems. It's tempting to the execs to push just a little bit harder to get what they want. If they push too hard the whole thing snaps and you get a bunch of bad press that totally wrecks your studio's reputation.
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