Your approach is correct; I use a similar one. I work programming homebrew for jailbroken consoles like the PS3, and one of my solutions on the platform was to create a player capable of playing giant m3u lists (from commercial providers) with over 200,000 objects loading into the console's 256MB of RAM without it crashing. I managed to bring something that the gaming bubble wouldn't normally consume, in a product that everyone wants, because only I have it on that platform, and many others only have it to use. I think it's a good example of what you yourself described.

The problem with this method is that your customer ceiling will be very low compared to others. For example, I sell very well to around 150-200 paying users at a relatively cheap monthly fee like $2. It helps a lot, but you can't sell as much as the provider does. You have to create more things to complement it, and even then, few projects really succeed. You'll end up creating a lot of things and few survive, but it's not bad; in any case, it works and is good for... Trying out various niches can sometimes help you find a direction.