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My expectations would be for an improvement in the quality of the graphics (as well as the in game physics), after all that's why I spend hundreds of £/$'s on a new system. I do agree with you that development costs are likely to be the prohibatiting factor in the next gen in terms of games pushing the hardware (as opposed to the hardware's technical limits). Therefore I think somethings will have to change to combat this. Costs will either have to be kept lower which means lower quality games or revenue will have to increase. I think the latter is the most likely but exactly how depends on which direction the market takes, either a rise in digital distribution or an increase in the price of games.