Honestly I don't think they will go up much. Yeah the consoles are stronger, but they are also INSANELY easier to program for. The development cost should be the same, or even less if you are a small time developer...

Costs for AAA games will go up. Forgot about Epics statement: Next Gen Dev.Costs will "only" double. (http://www.gamespot.com/articles/epic-next-gen-dev-costs-to-double/1100-6400014/)
Advanced graphics need better (more deteiled) textures, more objects and more detailed effects. The more is happening on screen, the more details there are, there more needs to be animated. It is not like a grafic engine will give these things for free.

There is a reason why the very few still profit making publishers like Activision concentrate on only a handful of AAA projects to sell million of copies.

Probably, time value of money.

A part of game development that I can easily see become more expensive are the actors, with the increased focus on performance capturing for everything and the some people starting to become real "celebrities" through this, why wouldn't the actors start asking for more money?
I really wouldn't be surprised if a Troy Baker for example would start making possibly millions per game at the end of the gen, just like the film industry where production costs have also grown to insane heights which has a lot to do with the ridiculous amounts of money that the big actors get paid.
The development process itself I don't really see becoming much more expensive.

Programming is easier. That's nice.

But that does nothing to help control costs for the graphic designers, level designers, game designers, mo-cap studios, acting talent, animators, writers and management that comprise the bulk of game development costs.

Which means that it's not the case at all!

It doesn't really matter if they go up...Dev costs are already too damn high:

http://www.ign.com/articles/2014/03/25/sony-layoffs-hit-evolution-guerilla-and-sce-london
http://www.ign.com/articles/2014/04/09/segas-european-office-experiences-layoffs
http://www.gamesindustry.biz/articles/2013-10-03-significant-layoffs-to-hit-capcom-europe-report
http://www.ign.com/articles/2014/03/04/layoffs-hit-thief-developer-eidos-montreal
http://www.gamasutra.com/view/news/209865/More_EA_layoffs_this_time_at_Need_for_Speeds_Ghost_Games.php

There is no logic.

He doesn´t understand that you don´t open Unreal3.exe on your PC and the rest happens by itself.

Higher Quality assets take a lot more time to make, it takes more time to make a highly detailed Object, it takes more time to make a super high quality texture than some N64-textures.

Development costs for AAA titles will go nothing but up.

And "Devs are doing better now more than ever. The only reason people get layed off is if they have no talent or they cannot adjust to the market"

.......

Seriously ?... what an ignorant thing to say!

I don't think that teams will get smaller or will release games faster with the same size so that inflation alone will increase costs even if teams will need the same man-hours (do you call it like that?) as last gen.

So, if Infamous: Second Son was made by the same team in the same timeframe as the first Infamous then it was more expensive and I doubt that teams for Infamous, Forza 5 or Dead Rising 3 were smaller as for their previous releases.

I mean, what did the average employee earn in 2006 and what in 2013 or even 2017? How much did they have to pay for energy compared to nowadays? Or to fly to Gamescom and have a stand there? All these costs rise even if better tools and engines allow to achieve better looking or bigger worlds in the same time.

So yeah, I get the feeling that cost will still increase at least for big games. Small Indie games are maybe cheaper to develop nowadays.

That's why DLCs and microtransactions will rather get more as less this gen and developers like EA or Ubisoft will still have problems to be profitable.

Well, that's what I expect, would be happy if I'm wrong.

Devs have to top themselves with every iteration, ESPECIALLY western games. You're talking about comparing development prices, well just look at the games we've seen so far. None of them have been even close to a finished product yet from what I hear. MGS was like a 4 hours campaign, Titanfall has no singleplayer campaign, etc. Devs are either going through growing pains for the next gen or they are expanding their studios for the bigger budgets.