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jlrx said:

Is it not also the case that high development costs lead to less risk taking and a lack of New IP?

Of course! Imagine the failure of creating a new IP in high-production costs and seeing it tank!

On the flip side, other studios have been able to do it elegantly, especially Naughty Dog. I guess it all depends on the caliber of the studios. But you can be certain that studios with less certainty of success are in big danger in a cut-throat business like the HD twins.