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Honestly, I'm kind of happy AAA game prices are going up, because it should give AA games higher chances of success.

The large amount of games isn't really a big problem so far, because the industry is huge these days. PC, Playstation, and Switch are massive, and the Switch 2 is guaranteed to follow suit. Subscription services are reasonably big as well. The rise of China as a market should also help absorbing the increased numbers of relevant releases. I don't think the output is disproportionately high yet.