On a recent Podcast, Shuhei Yoshida, who was head of President of Sony Interactive Entertainment Worldwide Studios from 2008 to 2019 and head of PS Indies from 2019 until this year, says that the jump from PS4 to PS5 has caused dev costs for AAA games to nearly double.

“I saw some analysis or estimate of one same franchise released during PS4 era and PS5 era generation double the budget,” Yoshida told the podcast. “And that has reached the point that we cannot recoup this investment.”

https://www.videogamer.com/news/ex-playstation-boss-reveals-aaa-publishers-arent-signing-as-many-games-as-the-jump-from-ps4-to-ps5-doubled-the-price-of-development-for-very-little-improvement/

Really puts into perspective the state of the AAA sector.

Which ultimately leads to less risk taking and innovation, and much more focus on safe bets. This will eventually collapse or we’ll only get like 1 or 2 games from AAA publishers.

We’ve seen what the indie and AA space is capable of. That’s where I’ll be spending most of my gaming time going forward.

I always read this as "soft-PR", almost like those teams are begging us to buy their games since they are so expensive to made we should feel somewhat pitty and more willing to pay 80 bucks lol

This model has proved again and again to be sustainable for third parties that release cross gen and cross platforms games they expect to create multiple DLCs and other kinds of in-game purchases to recover the investment over the years

Big studios can also release some smaller projects between the heavy hitters if development costs were a problem. Since most of people only play a few games a year releasing more games will not lead to increase in consumer spending, let alone the consumer spendind of a specific publisher

I think 7 to 10 million as sales target for AAA projects now, which is a lot but we are talking about an era where a blockbuster can easily pass 20 million units when well received so it's not like those big publishers are anywhere near the bankruptcy

Sony already only publishes 1 or 2 games a year (not counting MLB the show). 

This is also why Sony is putting their games on PC and soon Xbox. People don't realize how expensive games are to make and the risk you have to take.

Yeah when you have to sell 10 million plus to turn a profit, it tends to lead to homogenous products to appeal to the broadest possible audience.

AA games often have more style and flavour as they can afford to commit to a specific target audience.

It also explains why they wanted to push into live service models faster. But I believe this has always been the argument explaining why they did.

But still, I am surprised we didn't see more of the UC4 > UCLL loop.

So take the money and instead of making one disaster like Concord. Make 2-3 smaller projects. Have half of the studios do something smaller and most trusted studios work on that big budget game. Instead of throwing all the money into the gaas pot which has been a dismal and deserved failure,

The problem is selling a new piece of hardware with games that don't look much better than previous generation.

Engines are scalable. Fast on Switch 2 was made by 5 people.  Most stuff has been cross-gen anyway, 3rd or first party. People bought them anyway. Stellar Blade for all the comparisons people want to make to Nier Automata, looks leagues above it. You can bet it has a fraction of the budget as some AAA stuff. It's not always abut pure visuals anyway. Astro Bot takes full advantage of PS5's power and abilities. If something plays just like a 10 year old game but shinier visuals, is it really worth a new console with a bigger budget? That's why ToTK on Switch was worth it, new gameplay. Rift Apart with the portals was a mechanic showing off new abilities like Astro, built into the PS5. 

Games published by year without The Show, remasters and games they don't publish on pc since the PS5 release:

2020, 4 games 

2021, 3 games

2022, 4 games

2023, 3 games 

2024, 6 games

2025, 2 games