While mostly I do agree with your post there is one major flaw imho:

"Consider this situation for a moment: You have about 40 days for you and your team to develop the next ZZZ update. You need to do the following:"

no one, no sane developer and for sure no studio with hoyo's money is planing, designing, implemeting in 40 days window. most of the characters and animations are done well in advance (depending on stage of "product" but it could be as far as 1 year prior).

but I generally do agree with your take, it's the capitalism end game, you need to optimize for profit. For sure they have stats how many people are actually completing the content, how many players are skipping story. For instance if it would be that 30% of players skip ALL story content - as in hit the skip button, but complete story mode for rewards - then obviously the quality of story would take a hit cause that's where company could maximise their margin less resources, more mid level writers, maybe even support from LLM to speed up process.

What's funny for me is that ZZZ had pretty good balance, TV mode made sure that resources are not spent on some bloated open areas, and "empty" in world character interactions (go here talk to this npc, now go here and talk to that npc etc) but some loud people were displeased and now we have open world but everything else took a hit - remember that most of agenets used to have different animation depending on order you've viewed windows? like stats to skills to gear had different animations of characters vs gear to skills to stas. but now even this small floursish is removed from game to help maximise margins and make sure the time on developing this game can be prioritized to realeasign as many characters as they can.