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This has been a growing problem since the Atari 2600 days when many games were made by just 1 person. It's unfair to blame Microsoft and Sony for what is basically technological progress.

I know Nintendo is getting a lot of praise for the Wii and it's keeping development costs down but they didn't solve a problem just postponed it.  Eventually they will have to bring out an HD console and have the same problems that the other consoles have.