PantherLotus said:
While this certainly has merit, isn't this entire discussion based the false assumption that dev costs will continue to rise over time? Even producing something as detailed as Crysis and turning it into a platformer for the PS4 will eventually become cheap.
Excellent point. However, the key word in that last sentence is "eventually." The savings in development costs accrue at an extremely slow rate: whatever savings are being realized are being profoundly outstripped by the increasing costs of development. For example, we can assume that EA was realizing cost savings throughout the PS2 generation, but despite that,
their development costs increased 75% from the beginning of the generation to the end of it, without producing many more games (which is to say that the average late-PS2 EA game cost 50-75% more than early-PS2 EA games).
So yes, the technology does continue to evolve for these genres, but it is profoundly slower than what we are accustomed to. If I was to simply ballpark/shoot from the hip, I'd say these stagnant genres are increasing their production quality at perhaps 15% of the speed a more freely growing genre is.
I don't expect these genres to fade: Driving/Racing, FPS, Sports. I expect other genres that were previously held back by hardware (RPG, Strategy/RTS, etc) to either find a way to adapt and reach a new audience with amazing graphics or they will recede. I also expect that previously immense genres to find their way into permanent nichedom.
All of these genres will unquestionably and inevitably reach a ceiling. Consider Sports as a premier example. As EA is the undisputed sports franchise leader, looking again at the EA information I gave is enlightening (specifically, look at page 100). Here are EA's R&D costs and profit, respectively, over the last 5 years.
FY04: $511 million R&D costs, $577 million total profit
FY05: $633m R&D, $504m profit
FY06: $758m R&D, $236m profit
FY07: $1041m R&D, $76m profit
FY08: $1238m R&D, $487m loss
(Clarification: I added FY08, as that information wasn't available in the given report). It's possible that EA is simply losing more and more and more money on everything they do
except Sports games, but more likely, it seems clear that even these are reaching their upper limit in production values. And again, look at those development costs increase over time, and look at those profits gradually shrink. Production costs are a steep hill, and there's no reason to believe that we'll stop climbing it.