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Slownenberg said:

I mean, companies that are spending hundreds of millions of dollars on a single game, and can't make it profitable, can only blame themselves. Nobody is forcing them to use ultra realistic high end graphics on every game. Plenty of games look amazing in different art styles.

Besides, with diminishing returns, the best graphics of today aren't that much better than from like 10 years ago - like oh the resolution on textures is ultra ultra high instead of just ultra high and there's fancy ray tracing lighting that the game can barely run and there's 15 million polygons on screen instead of 10 million. And all that costs tens of millions of dollars extra for the man-hours to make these small changes to look slightly better and most people wouldn't care one bit. The obsession with ultra realistic graphics not being good enough and we need extra ultra realistic graphics is what is killing these companies. Back in the day people cared about graphics because the tech was rapidly advancing, now from PS4 to PS5 it's like okay things look slightly better and it makes no difference to the gameplay so who cares, but it made the game cost an extra $50 million for all that fine detail work.

The reason why Nintendo is making gobs of profit hand over fist is because they don't go after ultra realistic graphics that adds tens of millions or even more to a game's budget. And their games are no worse from it. There are probably lot of games that could be taken from $100M to $50M budget and not much would change about the game other than the graphics looking great instead of extra great.

RayTracing is computationally heavy but it saves development time and cost when the game is designed around it.

People like to assume Nintendo's games are cheap to make, and it's probably true with their less revered games and I guess Pokemon (Nintendo's worst popular title). But do we actually have any proof that the likes of Tears of the Kingdom, Mario Odyssey, Xenoblade, and Metroid Prime 4 are "cheap"? These games take too long to make (maybe not Xenoblade. Monolith is quite productive). And we don't know how much Nintendo spends on marketing, do we?

Lower game developer wages in Japan and the weak yen likely bring the dollar cost down more than graphical fidelity. Nintendo's best games are probably quite expensive still, especially in a Japan context, but it doesn't matter at the end because they tend to sell like hotcakes and at high prices. Other areas where I think Nintendo often saves money are voice acting and cutscene/cinematics/mocap.

Certain aspects about improved graphics increase development budgets, but many of them cost next to nothing, and some of them (like RayTraced lighting) can actually reduce costs.