I find it odd that people are still trying to argue that HD development costs are not dramatically higher when every publisher in the world claims that they're dramatically higher, and most publishers that are running record losses (at a time when they have record revenues) are claiming that the main reason why they're losing money is due to out of control development costs on HD consoles.
In the previous generation (and on the Wii) a typical "Core" game would have a development team of 30 to 60 people who worked for 18 to 24 months, and a typical HD console game have development teams in the 80 to 120 range who work between 24 and 36 months to complete their project (with the occasional game that takes 120+ people 4 years to complete). There are very few "Fixed" costs besides the physical manufacturing costs of the discs/packaging, and marketing is certainly not a fixed cost ... As you start approaching $40 Million in development costs on the core game you're going to spend far more on marketing costs and "Production Values" because you simply can't afford to risk the game not finding an audience.
Beyond that, trying to estimate the profit based on retail sales price of a console ignores that the licencing fees across the consoles is not the same. When the XBox 360 first was released third party publishers defended the new "$60" price tag claiming that the majority of the price increase was due to an increase in licencing fees associated to the games ... At the same time it was rumored that Nintendo dropped their licencing fees (to the level they were at for the PS2) in an effort to attract more third party development.
