@markr makes a good point:

users expect high quality games for a few cents

Expectation is the key here. Thinking of games as a commodity, the consumer is now presented with a staggering amount of choice and I think we're seeing a situation where supply outstrips demand by considerable margin. Therefore, unless the item is of perceived scarcity/value, it's likely a cheaper (free-er) alternative will be available so we've learned to go find it.

Added to this is the key problem with the web: it was not designed as a paid content delivery platform. iOS was, droid wasn't, etc and it shows.

The users of the "desktop" web do not expect to pay for content so this IMHO presents the biggest problem for HTML5 games.

My suspicion is that HTML5 games that will be able to 'monetize' effectively won't be casual games. They'll be hybrids of free to play / subscription based models using well known I.P. e.g. a Fallout universe based MMORG over HTML5

I like messing around with HTML5, unfortunately I don't think it's ready for commercial game development yet, for one reason only: the audio situation, especially cross-platform, is a Grade A Nightmare. The W3C and partners spent an inordinate amount of time on Canvas because it's big and flashy and makes for good demos, then almost completely ignored Audio.

First, the Audio tag sucks. I don't think any browser implements it the same, not even the various WebKit browsers, and there are some weird bugs on each platform. The standard doesn't even define something that is really useful for games. You can hack around it, but latency is a huge issue and those bugs tend to rear their heads at inopportune times.

The Audio API doesn't seem to be coming anytime soon. You can again hack around it with some funkiness involving Data URIs (which sorta-maybe-kinda-works, but not really). Fun as a proof of concept, sucks as an actual product.

On top of that, there is no indication that iOS is ever going to let us play audio in a way that makes sense for games. Apple explicitly violates the HTML5 standard for audio and video to be able to prevent any notion of auto-play. There are a number of hacks to get around them, Apple is always trying to close them. That throws out a huge market for HTML5. Funny, remember when the iPhone was first released without native 3rd party apps and Steve Jobs told everyone to make HTML5 apps? Then, when everyone pitched a fit and the locked-down App Store was introduced, they even used HTML5 apps to shoo everyone's fears promising HTML5 apps would be unfettered. So the only reliable way to get an HTML5 app to work with audio properly is to wrap it in a Native app and put it in the App Store. Hell, if you're going to make a native app, you might as well make a native app and get access to a semi-decent audio interface. It also kind of defeats the point of HTML5 giving everyone a single point of entry to the game. I don't want to have to say "go here to get the game, except you people, you go here".

If all you wanted to do was work on desktop browser games, you can get HTML5 audio to work, eventually, well enough for puzzle games and anything that doesn't strictly *rely* on audio. In its current state, I don't think you could make a rhythm game that worked well. So if you're stuck on the desktop, you might as well do Flash or Java at that point. Even the people I've seen who *are* doing successful HTML5 games at least use a Java or Flash adapter to do the audio, that is how bad the audio situation is right now.