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Well I have surely noticed diminishing returns, but there's still enough room to improve.
The leap from early 7th gen to now is gigantic and even looking back to something that was once considered a good looking game from the middle of 7th gen (Resident Evil 5) now looks pretty shitty even though it has seen a remaster.
Just mentioned that because I'm playing the remaster right now. Character models look acceptable but effects and environments are pretty poor.