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I think the message that Nintendo meant to send with the Wii is "You don't need the latest and greatest technology to make games that look good and play really well" and what a lot of third party developers read was "On the Wii graphics are unimportant and not worth the effort" ...

For the most part this hasn't hurt any developers yet, but with companies like Factor 5 and High Voltage producing games that look dramatically better than what other developers have produced, many developers may find that their games are losing sales and 'hype' to games which because they haven't put the effort into their own title.