Hell if I know, I'm no graphic designer. But I expect the more detail you put into the graphics, the more time you spend drawing them, the more it'll cost you. So the key is making things look great with less detail, or finding an easy way to make things look more detailed while keeping them rather simple -- like using better textures instead of rendering every single object in 3D.

I like that article quite a lot but you got to take some of the numbers with skepticism. In the example of Dead Space 3 EA would have done some serious miscalculations if they think that Dead Space 3 would 5 million units without price drop. In fact it most likely won't even get to half that. If $40 out of $60 retail price goes to publisher than 5 million copies implies a budget of $200 million for Dead Space 3. That just seems outrageous even when you include the marketing and other over head costs. 

OT: It is becoming hard to compete with the bigger budget companies. So i guess there might be less risky ventures next generation. I am sure there will be new ip's at the start of the gen but if they'll continue will surely depend on how well they hold up. The indies will continue to get better and better though. Also variable pricing for games should help if used wisely. Not every game has to be $60 bucks on launch day. 

Nintendo will continue to benefit by keeping their budgets low and selling games in high volume. 

It personally feels like more games have been released recently, particularly for the PS3 and 360. The frequency of quality games seems to have increased from the start of this generation to 2011, at least for me. 2012 was pretty dry, but that year seemed more like the exception than the rule. Many might disagree with me, but I think this generation even had more quality games than last generation. Keep in mind this is without considering digital distribution, which is only going to be more prevalent next generation.

Studio closings honestly haven't affected me much. For the most part, the studios that get shut down fall under one or two categories. Either they make games that sell very little, in which case I didn't even notice their disappearance. Or they invested an excessive amount of resources into production value forcing them to shut down even if their game sold well. It's rare that a studio like this actually makes a game I enjoy, so I wouldn't notice their disappearance either.

I'm not saying next generation will provide more games or that it won't provide less games. I'm just observing what I have seen so far. I'm personally not expecting a noticeable decrease in studios next gen, or at least not a decrease in games. Considering the increased frequency of quality games in conjunction with the inevitable rise in digital distribution, I'm fairly confident that next gen will be awesome for me at least.

Well this is the exact quote from EA: 

EA Labels president Frank Gibeau explains, “In general we’re thinking about how we make this a more broadly appealing franchise, because ultimately you need to get to audience sizes of around five million to really continue to invest in an IP like Dead Space. Anything less than that and it becomes quite difficult financially given how expensive it is to make games and market them.  ”

Maybe he's talking about huge profits of the game, maybe it needs less sales to break even. If it is the former then EA is probably one of the greediest companies out there, if they don't intend to continue support of the franchise because they don't make a huge profit then I don't want anything to do with EA.

Ahh yea that guy. I think 5 million is their mid to long term sales projections. He loves to say random stuff and than claim that he didn't mean it. He also said that he is not green-lighting any more single player games. Later he goes on to defend that. http://www.polygon.com/gaming/2012/9/5/3293443/eas-frank-gibeau-and-the-future-of-digital-entertainment

If you look at Dead Space 2 numbers. The game sold around 2.78 million plus add in a million for digital sales. Looking it that way 5 million would not be break even point but more of a point that Mr. EA gets a bigger bonus. 

The industry will be ok if Sony launches the PS4 at $399 this year

Talking bout games not hardware.

I don't think there's any problems for the time being, some publisher's just need to look at how much a game could realistically sell and give it a budget to go with that, Dead Space 3's insane budget being an example of bad management, but if that money were invested into the next battlefield, then good job :)
Someone here said it cost just 25 million dollars to make uncharted 2, a good team can make a great game with a relatively small amount of money, just depends on what studio it is.

the hardware is where these games sell

personally I find the comitment to new IPs commendable but that's just me I guess. I supose that some people prefer the same old thing again and again even after the IP has run it's course.