A nonprofit high quality videogame is MORE than possible, the fact that some people think its impossible is what is limiting it.
Who exactly is going to spend the money, time and energy into making a video game, and then not make a profit? How will they stay in business and pay the employees who developed the game? The whole reason a company make a game is because their is money to be made. It is a business after all, and businesses need to make profits in order to remain in business and be successful. Without the goal of making profits companies would not make games to begin with.
Think of it like this: would you rather earn your money in small, safe chunks over a long period of time, or do you want to wait three years, invest tens of thousands of hours of work, to see if you actually earn a penny (but perhaps get millions). The latter works for CoD, but the rest of the bunch are dying.
The Free to Play idea is a relatively new idea in gaming. To suggest that all the gaming companies that are not "Free to Play" are hurting and dying besides CoD is ridiculous. Ever hear of Assassin’s Creed, Far Cry 3, Skyrim or Battlefield 3? Four of the most profitable games in 2012, and none of them were "Free to Play".
This transition to the "Free to Play" model has nothing to do with companies surviving, and everything to do with making more money. Crytek thinks that they will make much more money this way, and that is the only reason they are taking a risk to do it.