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It's a bit of both, probably. Hard to say where the bottom line will settle.

For instance, with the PS4, developers have said the start up time to get a game going is much less than with the PS3. One developer said about 2 weeks instead of 4 weeks. Time is definitely money. Games are also going to be easier and faster to port from/to the PS4 from/to the PC and 720. That's more money saved.

I get the impression that for most projects, costs aren't going to rise all that much.