If we start off with the assumption that a next generation will have to offer some significant graphical leap over the previous generation in addition to increased computing power for physics, AI, game logic etc.
If a high production value game today need to sell in excess of a few million copies before it can even break even, then on the next generation we can assume the break even point will be multiplied at least several times. Are there really enough core gamers that are willing to buy a new next gen console at around launch? One game that only sells moderately (i.e less than 4 million copies say) could be a financial disaster, and bankrupt a company, so it'll be either do or die.
If a high production value game today need to sell in excess of a few million copies before it can even break even, then on the next generation we can assume the break even point will be multiplied at least several times. Are there really enough core gamers that are willing to buy a new next gen console at around launch? One game that only sells moderately (i.e less than 4 million copies say) could be a financial disaster, and bankrupt a company, so it'll be either do or die.