I agree. They have never recovered from the huge cost of the CryEngine port (IIRC, around 80mil). I think that decision was based on the desire to "go big" as you say, I just think it was the wrong decision at the wrong time. Certainly Gamebryo was spiraling the drain and in order to move forward they had to move to something else. Why they chose CryEngine is a mystery, I can only guess that at the time Unreal Engine was either too expensive or too complicated, even though it clearly would have been the better choice for an MMO. Regardless, I think they should have held out just a bit longer and built the player base more, as you said, and worked on innovating the mechanics further. Then they should have hired a competent CTO that would have been able to guide them better towards newer tech.
It's not just past mistakes either. Take a look at the rather shortsighted Compet venture. Having worked in the brutal mobile market, I can tell you that it's all about ad spend. There are mainly 4 companies that own the market, and you have to put down a very large wad of bills to get anywhere. If MindArk can't market their flagship product properly, I don't see how they stand a chance in mobile. I won't even mention all of the shortcomings in the game itself. In the end, this will have been another waste of time and resources that they may or may not recover from.
So no, they aren't sitting on piles of cash laughing at our bad loot. I see them as a struggling company trying to stay alive and recover from continuous bad business decisions.