Production values are essentially marketing budget. They don't make the game any better past a certain point, but they make the promotional material look better and offer a "wow" factor that gets the attention of potential customers. After an hour or so of gameplay, the "wow" starts to fade away, and all you're left with is the game.
As long as customers keep falling for the "wow", publishers are going to keep driving up costs to help market the game.

"The worst part about these reviews is they are [subjective]--and their scores often depend on how drunk you got the media at a Street Fighter event." — Mona Hamilton, Capcom Senior VP of Marketing
*Image indefinitely borrowed from BrainBoxLtd without his consent.







