For starters, you don't need 1,000 people to create a game. Nowhere near that much. Art team (concept, 3D, etc), production (a few producers and associate producers), game design (quite a bit), programmers, UI engineering (usually around two) sound, UX (really small amount), QA (often the largest team, to be honest with you but again, tends to be outsourced) etc. The teams I've worked on range from around 80 to 400 - stretched to 500 - maybe 550 - when you bring on short-term contractors (for some of the larger AAA titles). Cinematics are usually done by an in-house team but can sometimes be outsourced. Blizzard's cinematics team is legendary, for example.
Secondly, they didn't build an "engine from scratch". They used Amazon Lumberyard, which itself was based on CryEngine, to which they now refer to this heavily modded engine as StarEngine.
Once launched, the team can be reduced with people there to either maintain or create additional content.
Now, development costs can be huge (Black Ops reached $700 million, for example) but that is a three-year cycle and time is always short. For Star Citizen, they've promised delivery now for quite a while and it's clear that feature-creep is probably the biggest culprit, to be honest with you. It would have been better to launch with their actual fully-complete game within scope and then rapidly expand on this, as per Elite Dangerous, for example. They released a great base game and have expanded on it an insane amount (I still play to this day from day 1).
Anyway, hope this helps.