better graphics don't destroy good devs, they only act as a catalyst for destroying bad devs. Without better graphics each gen, we'd see a lot of low budget shovel ware. These are the kinds of games and devs that we're destined to be doomed and the increased cost of making games speeds up the reaction.
Meanwhile, the truly good games (such as undertale, Pokémon, shovel knight) continue to do well despite low quality graphics when compared to Call of duty or driveclub.
Personally I'd rather have fewer games that are actually made well, than have a sea of low budget, low quality cash grabs.
Finally, to actually stimulate developer growth, it's better not to lower our standards of gaming, but to raise the standards of development tools. In other words, make it easier for devs to make games by giving them better tools. Better hardware is usually a great way to approach this and that's why having an underpowered console really hurts.
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