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Copycon said:
If this is true, then why do companies waste more money on developing a game than they (if they think realistic and not are living up in the clouds) calculate to get in return. Is it a race to the bottom, where all developers will collectively suicide in the end? It sounds crazy to me.

And how is it with middlewares? I thought they were supposed to lower the cost.

From day one, many companies were in this position and they were profitable because of the massive profits produced from their few successful games ... This (probably) wasn't nearly as bad with the Atari or NES when you spent $250,000 to develop a game, it took 10,000 copies sold to break even, and a big title could still sell several million titiles though.