One question I haven't seen asked in this discussion is "How healthy would the gaming market be if the Nintendo DS and Wii were never created?"
Certainly, there will be people who keep their heads in the sand and claim that the industry would be very healthy because games like Grand Theft Auto and Final Fantasy can sell millions of games and easily cover their budgets regardless of how big they're; personally, I'm much more skeptical.
Majesco has been a strong supporter of Nintendo's strategy with the DS and Wii. They are (currently) producing many simple games rather than the big budget games they used to but this isn't because of the popularity of the Nintendo DS or Wii. A few years ago Majesco produced a game called Psychonauts which was critically acclaimed and sold so poorly that they lost a ton of money on the project. The depressing thing is the Psychonauts flop is not unique ...
The PS3 and XBox 360 have much higher development costs than the previous generation platforms did, in particular for games like the one Tyler B is talking about. What would happen to these games if publishers start betting their entire company on the success of a couple of titles?
