This isn't a very good argument, to be honest.

The OP is taking all closures and using them to "prove" that the reason he gives is the cause. That's disingenuous. What about all the other reasons that cause businesses to close every single day around the globe? How many of those developers closed because of bad management? Crytek's rapid expansion without the resources to back it up comes to mind. How many of those developers closed because they did not deliver a quality product? Or they failed to deliver a product that filled a demand?

I bet we can look at a good many of those developers and the reason for closure will be something other than "graphics arms race."

On the other end of the spectrum, there are developers who had great success producing games that did not have big budgets or amazing "graphics". They are part of the equation, as well, and cannot be left out.

The truth is, like it or not, game development is a high risk, high reward industry. The success of a developer often depends entirely on the success of an individual game. Very few can survive a complete failure, much less a string of failures.

Many other industries have high failure rates, as well. My family owned a restaurant, which is a very tough industry to survive in. I sold my own business at its peak but the person I sold to was terrible at business management and it died within two years.

It's not easy to find success in business. In a crowded market, most entries are going to fail. That's just reality.

If anyone wants to make a solid argument, I suggest they build it with a better foundation.

I don't feel too many people are demanding graphics anymore. At least, not anyone who plays console. It's reached a point where is pleasing to the eye, and people who want more can find comfort on PC.

Devs killing themselves on AAA graphics have no one to blame but themselves. Just look at Darkest Dungeon: there's no reason to bang your head on the graphic wall to get good sales and reviews. Leave high end graphics to the high profile games, like first party Sony and MS, or regular record breakers like Call of Duty.

The Cell was also PowerPC.
Wii was also PowerPC.
Gamecube also PowerPC.

Last gen consoles had Direct X and OpenGL or a derivative-of as high-level API's.

HD or "High Definition" is basically a term to reference 1280x720 resolution or 720P.
Resolution itself doesn't actually increase development costs or time at all, it is the assets, motion and sound capture which costs time and money... Otherwise, back in 1995 when Carmack was building and playing Quake on a 1080P CRT monitor, it would have cost the same amount as a game today in 2016 built at the same resolution. But it doesn't.
People forget that the PC has had 1080P monitors and thus games whilst consoles were only thinking about 3D graphics at 240P.

Yes but the cell was much harder to develop for than the 360 was according to devs so I doubt it was just a standard PowerPC

The reason I said the wii was 2 gamecubes with motion controls was so show the difference in power between ps3/360 vs the wii

Yes I am aware last gen had dx/openGL but that comment is in relation to still having those kinds of differneces. And most people take HD development as 7th generation development and not literal HD resolution hence why the follow up sentence mentions "new graphics technologies"

Maybe? Dunno but I'm willing to bet those prettier graphics cost money and time...

I'd much rather those resources be put towards refining game mechanics than refining the visuals. If developers want to make their game look nice, they should aim for great art style rather than chasing polygons.

Am I missing something here? The EA exec claims that new AAA games require more people and thus bigger budgets, so there are less AAA games being developed compared to before. Nowhere did I see anyone mentioning studios going bancrupt due to developing AAA games :/

I wouldn't worry much about it, it's similar what happened with Hollywood in the early days, only few majors were left in the end, then there was renaissance around 70s, then it turned to crap that it is now, but we have great TV shows to more then make up for it.

Same thing is happening with gaming industry, AA will come back to give us great "shows".

The Hollywood style model, where there's really only 4 or 5 major movie studios is probably where the *console* gaming industry is headed.

However it's counter-balanced by indie productions, just like in the film industry, nowadays you just need a decent DSLR and some lights and you can make a movie. Today you can make a video game in your garage with a couple of friends and even get crowd-sourced funding for it.