I think a smaller company could pull of a FPS, but it would take a lot of money and skill to make it look and feel as good as current gen FPS games. However I think the real problem will come from the story, the stable games have a story already built up. People know zombies, people know NAZIs they don't need to be told, these things are bad and here is why they already know. For WW1 a lot of people just don't know that much about it, they only learned the very basics in school. So the games storyline would have to cover details about why you are at war, why this is all happening...why there are no tanks or assault rifles.
For a long time they said Western games were dead, that people didn't want to play them any more. Then Rockstar made Red Dead Redemption and Westerns weren't dead any more and it turned out they never had been, the players just didn't have anywhere to turn to play the game they wanted to play. I think WW1 could fall in the same boat, most companies think it wont sell but out there is a group of people thinking it just might and they could just walk into a gold mine if they pull it off right.
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