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I don'T think dev costs will rise up too much in the future just because of engines. When you get all this power you don't need to try and squeeze every bit of power you get because you already get a plenty. Engines will do the tricks but I think that there will be more engines in the future than what's currently available. Crytek and Epic will get competition because using an engine will result in less developping costs then more devs will look into different engines. Avatar graphics imo is possible, it will be mostly about software and programming techniques.