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I think one should not take this out of context.

Not every game cost a fortune to produce. Saying that, big budget games do come across as more polished and refined.

I bought a HD console for the graphic capabilities and "realistic" looking games. IMO that's an important part of a game. Some will obviously disagree but that's you and this is me.

If developers turn to making crappy looking games to save cost I am better of with my wii - no offence to the wiisters.

This is nothing new in many ways. That is why so many sequels are always being churned out. To save\make money.
It is now far too risky to create a new AAA title, better to spin off Halo, put out another GoW, Left for dead etc., and make some guaranteed money.

This economic problem I believe will mostly affect those looking to develope new engines for new, big projects.

If you have a good engine it is best to license it out to "friendly" developers who in turn might help improve on it.