Sega talks about their actual state. Core games at risk

[NJ5]

dharh said:
Wouldn't attribute that to HD graphics alone. Game developers have been pushing the envelope of graphics since gaming started. I rather attribute it to many different factors, of which complexity in games (graphics being _a_ factor of said complexity) is perhaps a major component. Making last gen graphics games are not going to instantly make games profitable.

There are specific quotes from developers highlighting the difference in costs of making HD graphics, including Polyphony Digital's comparison of how many days/months an artist takes to make a car in GT5 as compared to the previous GT games. Graphics is certainly the biggest factor here.