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DMC4 was not a bad game, not as good as DMC3, but (arguably) better than DMC1 and definitely better than DMC2.

Personally, I think Capcom are fine, it may be a while untill they have another break out AAA title that isn't from an established franchise, but so long as their series continue to produce good quality titles, I doubt many would care that they are not the best of the best.

@Godot: You forgot to mention except for castlevania as well (that series had a big return to form with the handhelds).