But when it works, when that day comes, we’ll make a hell of a lot of money for the shareholders! Isn’t that nice?

At some point, people figured out that during a couple of weeks of mad rush right before a deadline, if you've got committed, well-rested employees who know they're going to get a rest afterwards, they tend to be much more productive than they normally are. Some bad managers only paid attention to part of that, and determined that eighty hour weeks are more than twice as productive as forty hour ones, and intentionally started inducing crunch. They somehow didn't notice that the third week of crunch is only about as productive as a regular week, and after that, it's way less productive as everyone's exhausted. Combine this with the fact that people with management knowledge tend to flee from the games industry rather than to it, and you end up with the software engineering industry's least effective managers running things with easily debunked dogma.