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IllegalPaladin said:

I think the thing we can agree on is that higher costs of games hurt the smaller developers. Everything else however, is up in the air.

If your statement means that higher costs only hurt smaller developers, then you are ignorant.

Higher costs hurt all developers as they all need to sell more to break even.  Larger developers have no more desire to lose money than smaller ones.  The difference between large and small developers is that the entry cost and risk factor may be prohibitive for smaller developers.