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This is an excellent discussion. Which we had ones of this quality more often.

In reading the replies I can't help but think of Miyamoto who says that you have to keep giving the consumer some new experience or they will get bored. Wii and DS were totally designed around this premise as were there main games: Wii Sports, Wii Fit, Wii Music, Nintendogs, Brain Age. All are mega (10m+) sellers (except Wii Music but it's still a hit). Now Nintendo also releases new versions of classic franchises too (Mario, Zelda)

With western developers they have simply lost all innovation. And for good reason. The problem is the western's world pursuit of graphics and realism. This has driven costs sky high. With costs so high developers/publishers are scared to try new innovative game play ideas. They'd rather do sequel 10 or yet another FPS or realistic action game instead. That's okay except... everyone is now doing it. First off, the preception is the sequel needs to be bigger, badder and more graphically powerful than it's predecessor. But then it also has to out muscle your competition's game too. So there's little to no innovation and lots of rising costs.

THIS ISN'T A NEW PROBLEM. We had this same problem last generation for the exact same reason. Same games over and over with ever rising costs and ever dropping profits. These same companies were all losing money then too. Just not as much. The HD consoles are merely bring this to a head. Bringing PC games to consoles also made this problem worse.