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DRM doesn't really do much, the only mostly successful one is denuvo (if you dont mind having the games performance negatively impacted) and that didn't exist back then... and I doubt that company could afford to use it anyway since its pretty expensive.
So yea, thats kinda what happened. Several bad decision more so than the no drm approach.
Yeah, plenty of no-DRM games are making bank, especially indies like Rimworld, Stardew or Terraria. It's not the DRM, it's bad management and the devs cashing out of a sinking ship as others have pointed out.
But I'll also add here that it was also that the Torchlight IP was a victim of other successful IPs like PoE. Why play the more cartoony Torchlight when there are grittier, move expansive, more fleshed out franchises out there? Hate to say it, but considering the competitors to Diablo, there were winners and losers and Torchlight was a loser that couldn't hack it.
And now it's a bottom barrel gacha mobile game.
The real one-liner should be: "If you can't hang with the big dogs, you better stay on the porch"
Kinda like how the Devs of All Orcs must die thought making it a moba was a great idea. I just wanted to put that last one in because both IPs were fantastic only to fall down the stairs... And there was a lot of floors.
Whatever side people are on, this is the price of doing business these days; and we all have to shake hands with it, or.... not play video games. Moaning and griping about it isn't going to make the industry change.