Yeah which is also why you see a lot of games that are 6 hours long, are going to be a trilogy, and promoted like its the best game ever made.  They're simply trying to make their money back, and often times don't but thats why they're making more games, cause using the same basis makes the next 6 hour romp is a lot cheaper to make.

As to why like viper said a lot of people thought things were gonna turn out differently, you really can't switch midstream when you've invested so much time and money.  Like with Lucas Arts they flat out said no Wii development until they saw how it turned out, when they saw it take off they hired Krome to make Force Unleashed on Wii in a fraction of the time they spent on the PS3 and 360 game. 

It's much like the DS' situation, PSP was going to take off, everyone said so, it was the answer to the hardcore gamers handheld prayers, it had the games at first and DS had little to no good 3rd party support for the first couple of years.  The difference in this situation would be the already being too far gone into HD development, it takes years to make one game, those teams are commited, they really can't just not make that game and hop ship to other platforms since the losses would kill them and the publisher would likely take them to the cleaners for not finishing the game.

Too few companies are Nintendo.

Seriously though, Viper1 covered all the good points, although I would like to add that the situation isn't as bad as it might seem (depending on what sources you use) It gets thrown around a lot that "only x% of games make a profit" First of all, a lot of these studies are bogus.

I remember one started with the assumption that a Wii game must sell 1 million units to make a profit (its closer to half a million btw) It then said that x% of games that the NPD tracked had not sold a million, and had thus made a loss. NPD tracks only the USA (and canada I think?) and so you can see why this is invalid. Regardless, it is actually a fairly common business practice - Release 5 games from new IP, 2 make a profit and get (very profitable) sequels, 3 make a small loss and don't. The profit from a hit game can balance out the loss from many flops - companies will take risks to get new hit IPs.

[sarcasm] Also it's teh piracy and the second hand market. Piracy and the 2nd hand market are both new things, as is the loss of money by companies [/sarcasm]

Again with this excuse.

The big games makes tons of profit this Gen, MWF2 brought in over a billion dollars. It's the mid range games that are suffering. These games cost 15-20 million to make and if they don't sell a million, profit will be none.

we also have to consider the economy being bad, that has really hurt the small guys.

And finally, The big company like EA losing money because their hands are involve into too many assets that are not as profitable as they used to be. Madden, Tiger Woods, sports games period are losing steam. Look at the sales of ME2, EA spent tons to advertise that game, yet it was very disappointing.

My advice:

Keep the big games on the HD systems, but have as many smaller game to the Wii, DS and PSP. Ubisoft which makes money does that pretty well.

If you make a bad game, then the developer should only get back what the game's worth in the eye's of the consumer. Companies are also run like shit these day's.

Too Human was an expensive game, that took year's to develop and then it released as an average game, despite the resources they had, none of it showed in the final product. Naughty Dog on the other hand released two well made game's in 4 year's and they both sold very well.

The game industry needs to take a good look at itself and revise their game development method's, we need less game releases and just a better watch dog on releasing quality software (Publisher's job). I can't think of many highly rated game's that have not made a profit, Demon's Souls has only sold 570,000 copies and From Software are happy, it's because they know how to use their resources properly and create good software.

I'd also like to point out to some people in this thread that a few Wii titles haven't profited as well and I still think that the blame comes down to the way a development set their priorities and uses the resources available to them.

 When someone saying they are not making any money this usually means making less money and not no profit.  Stardock has said for years that they make a lot more profit on  PC program other than games. If you invest 10 million dollars in a game and only make 11 million   when you could have invest the money else where and made 12 million  then often this is seen as losing a million.

 Obviously there are people  making a living developing games but when publishers start to lose money or make less profit it will make it harder to get  money to develop future games.  This is usually mean more companies  will take a safer route of developing more shovelware for the Wii.

Care to point out a single 15-20 million dollar budget Wii game that hasn't made a profit? Or would you prefer to keep up your trolling without anything to back it up?

now, LMAO, PLEASE show me where I said Wii games that cost 15-20 million don't make a profit?

Your analysis was that the problem was too many mid range games, and that the solution was to only make small games for the Wii. Although I suppose you also said to only make large budget games on the PS360. So your solution appears to be the compelte eradication of all middle budget video games. Prince of Persia can fuck off for example! Who needs it?

i'm all for making games, though there is always a risk involved. The main reasons for the lack on profit on games, i believe are

higher risk, higher rewards = greed
economic crisis
mismanagement
Saturation

My analysis was it was mostly these midrange games that are losing money while the realy big games still made tons. My advice was to do like Ubisoft and shift the smaller games to the other consoles while the big AAA games stay on the HD, that was just an opinion.