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I agree that with the current fixation on graphics/realism (outside of Wii) is potentially short sighted and may blow up in the industry's face. Why?

As graphics and physics and AI suck up $$$$ we are seeing a lot of gorgeous but very short games (Heavenly Sword, COD4, Drake's Fortune, Halo 3, etc). There are some exceptions like Mass Effect (which is I think 30 hours but that's actually still short by RPG standards) and I think Bioshock had a decent gameplay time plus lots of replayability. Some of these make up for short single game play with heavy multiplayer focus (Halo 3, COD4) but it's getting to be all the same. Seriously, how many variations of death match can people play?

I believe players will eventually get sick of paying premium dollars for 6-12 hour games and either rent, or buy used (and sell back) or wait until they drop in price, making it progressively harder for developers to recoop costs as this generation and trend continues.

Replayability is one way to compensation for short gameplay. Obviously Halo 3's multiplayer is addictive, and games like Wii Sports, Guitar Hero and SSBB can suck up many, many hours with very simple but addictive mechanics. However, none of these, including Halo 3, really need HD graphics to be at all successful. Seriously, if the xbox was still around and not the 360, Halo 3 still would have sold like hotcakes, laced with cocaine. There was very little added to the game by the 360's superior power.

LittleBigPlanet looks promising, but again, do the HD graphics really matter one whit in this game? No. It looks like fun, and that's what counts.