It looks outstanding, but aren't this kind of graphics extremely expensive to make? I'm afraid this trend is gonna make triple A gaming less and less profitable if something like this becomes the standard soon, but it does looks incredibly real.

Really taking a look at the top picture I sort of feel slightly underwhelmed ...

I don't care much for more geometry but what I want out of next generation are improvements to global illumination since I believe that will be the next step that takes us to photorealism ...

What we struggle the most with is #RayTracing and #Translucency ...

That's much better but I wish we could do better for translucency. I want realistic caustics, transparent shadow maps, coloured transmission, multiple scattering, and refraction ... 

If only we could get ray tracing to run in real time it would be a dream to get near quality rendered movie graphics ... 

As someone who found the graphical leap from PS3/360 to PS4/X1 quite underwhelming, and who hasn't really been blown away by a game's graphics since Uncharted 2 in 2009, I feel like I'm still waiting for that "next gen" feeling that games like Gears of War 1, Rogue Squadron 2, and Mario 64 gave me back in their day. 

Is the transition to physically based rendering not enough ?

This definitely looks great but I doubt games that look like this will be super common. Just imagine how much money it would cost to make something like skyrim with graphics like this. Even if machines are capable of this something tells me a lot of devs are going to give us slightly better than ps4 level graphics simply to keep games from costing $100 million

PBR is indeed a nice addition, but I feel like I haven't seen anything yet that utterly nukes last gen's best from orbit in the way that Gears 1 or Rogue Squadron II did back in 2006/2001. There are certainly some very beautiful looking games on current gen which clearly look better than anything on PS3/360, but the gap doesn't seem as big to me as it did in prior generations.

For example, I still feel like games like Halo 4, Gears 3/Judgement, God of War Ascension, or Uncharted 3 still hold up well in a way that, say, PS2/GCN/Xbox games just didn't by this point last gen.

Would be interesting to see what automation techniques arise from this. The closer we edge towards realism the more we are dependent on automated asset creation. With deep learning there could be some opportunities.
Imagine feeding a program a video from a walk through a forest and have it generate a whole virtual forest with thousands of unique trees with high quality self generated textures.

Because giant open world games are the ultimate goal for photorealism.

They haven't really needed to do that for a long time.
There is a middleware known as "Speed Tree" that has been used in games like Oblivion, Skyrim etc'.
And was even used in Avatar the movie.

Agreed. Lighting needs to be kicked up a notch.

Also wish to see better physics.

I think allot of people felt the jump to be underwhelming... When in-fact it was actually a pretty massive jump.

The old generation had allot of lighting and shadowing baked/pre-calculated and in extreme cases, part of the texture work.
Then the new generation came a long and did it all in real time, dynamically, it's more expensive.

Shame that the Scorpio and Neo is actually launching, would have been interesting to see if developers reverted to pre-calculated/baked stuff to save processing time and bolster imagry elsewhere.

I don't think you understand what this is about.
It's a technology that shouldn't blow out development time and thus costs... Contrary to popular belief, not all graphics technology's increase development time and costs, allot actually do the opposite.

It's not that far away.... I'm sure os4 could generate that if games ran at 720p 30fps