Increases in production costs are outstripping increases in revenue

[Bodhesatva]

I'm going to simplify many of the above responses.

There are definitely ways to bring costs down: middleware, increasing install base for next-generation platforms, unifying those platforms (not happening soon), learning the hardware better.

All of those are true, and I definitely expect the economic situation to go from "dire" to "acceptable." But the point remains: we've seen about 5-10 percent growth in the industry in terms of new users over the last 7 years, and production costs have increased over 100 percent. No matter how much fat we manage to trim, how many corners we manage to cut, that simply will not be sustainable. Either the market for "hardcore" games has to grow dramatically -- which, again, doesn't seem to be happening -- or game producers need to figure out a way to slow down the skyrocketing cost of game development, beyond what's listed above.