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I think graphically, things are no longer progressing, at least not in the sort of revolutionary way of past generations. They'll continue to increase but their importance will be reduced by deminishing returns.

Technology knows no bounds!! It will go in new ways, and I think next generation will be more focused on immersion than mere graphics. It's too early to say what, and who could have predicted the motion sensing of the Wii? But maybe 3d halographics images, enhanced motion sensing, thought control, who knows.