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I agree with everything you wrote, mainly about the rising cost of games not being sustainable.

About the graphics hardware, yes 1080p is pretty much max but GPUs still need to be capable of a lot of newer technologies - for example D11 capabilities. More powerful, expensive CPUs make more realistic games.

On the other hand MS and Sony have created an arms race between them and brained-wash a whole generation of gamers that "ultimate power" rules.

But yeah, you made good points.