The blog post makes it sound like devs have no choice but to pump millions into better graphics. Who's holding the gun to their heads?
The art design team at dev studios always create extremely high quality assets. Textures, 3D models, etc. One 360 and PS3 they had to down-res the textures and reduce the polygon counts while the PC versions got the higher quality assets.
With the next gen developers can keep doing what they've been doing but they won't have to spend as much time and money on lowering the quality of their assets to run on such outdated hardware. They also won't have to spend as much time tricking a system into going beyond what it was designed for.
The games of next gen will look better and play better and, but the development costs will stay about the same. After a few years games will start looking even better and devs will start having to get creative with resource management again. But by then people will expect higher quality gameplay and visuals so they'll need the power they had been taking for granted to do it.
