Which is also a nice side effect to reduce intellectual property barriers for developers that do already want to distribute their server or source code.
We all agree there is a foolproof method to fixing all bugs - delete all the code.
We also all probably agree that isn't the optimal balance.
Larger game studios would likely adjust as you say. However they too could adjust in such a way that they only offer subscriptions within California as that appears to exempt them from this rule. Many outcomes are possible beyond simply adjusting to the legislation in the way you are suggesting.
A) This state is not inherent but a result of there being no general requirement to release the sources. Middle ware would use different licenses if that was required to have any customers.
B) Omitting the sound code did not stop the community from releasing source ports based on that release, with sound of course.
It's nice in theory, but in practice many (most?) games are using middleware they don't have the rights to redistribute as open source. IIRC when the source code for Doom, the first major commercial game that went open source, originally came out, it had all of the sound code removed because it was dependent on a third party library. Not that you're going to have sound code in a server, but you may be using third party libraries for networking, replays, anti-cheat, etc.