Okay, you're insane. Every game ever made by a corporation is concerned with making money for its developers and publishers, directly or indirectly. No game is about "challenging your perceptions". How does shooting people until you yourself die (which are >90% of the games on an HD console really) consitute "progressive ideas"? How can a game be a "deep experience" when it isn't real and beyond the level walls there is empty space?

The console industry's profit margins have really started to dry up. There won't be a new console (other than perhaps a Wii HD, probably less powerful than, or at best on par with, the existing PS360) by 2012 to up the graphics bar.

Console generations, from here on out, will very likely be much longer in duration. The industry has matured, and expecting it to continue forward, as it, and the tech sector, did during its golden/early years, is folly.

In any case, even the highest-end GPUs, by 2012, will not dramatically improve anything but framerates at 1080p by then. Hot new graphics hardware is severely affected by diminishing returns, and 1440p (or higher rez) TVs aren't coming anytime soon (you can hardly tell the difference between 1080p and 1440p at more than 30 cm away from a giant screen anyway).

You can have a blazingly fast GPU, and you still need to supply the memory for the massive textures it could use (makes console expensive), and the art team to make those textures, as well as the disc space.

I cannot comment on the fill rates, however it is likely that the consoles will use commodity memory standard such as GDDR5. Modern graphics cards on a 256 bit bus are expected to realise about 160GB per second bandwidth, as modern GPUs aren't bandwidth contstrained assuming this remains the standard or something similar, 80GB-120GB per second would be a decent estimate on a 128bit bus and would more than satisfy the requirements of a console of that era.

The problem is, you're making the assumption that the next generation consoles would have the same CPU + GPU architecture. They could instead use either a unified design or a CPU/GPU multichip module and stitch them together through a single unified bus.

Yes. The scale of investment that will be needed to make an 8th generation game look the best it can will bankrupt any developer whose game fails to sell a million copies. THAT is the reality of next-gen.

The next Gen consoles will each be powerful enough to handle anything at 1080p @ 60fps, nothing more, nothing less - they'll pack whatever power needed to do this.

The reason for this is cost - think MS and Sony will each learn from their mistakes this gen i.e. no RROD and keep costs of hardware down.

The performance we can expect out of consoles in 2012 will be whatever high end PCs can do in 2010 if history continues to repeat itself.

Everything you said holds true for cinema as well, yet cinema has established itself as a valid artfom. There are many movies that are not big budget that you have probably never heard of by directors more interested in expressing their artistic visions than making a box office smash. Only 5% of books break even yet there are many literary classics and more released each year,, another medium established as a valid artform. 90% being crap holds true for every media format, not just video games. It doesn't mean that the small minority is not worthy of recognition.

Just to be clear; I do think games can be art; I just don't think that Sony is in it for the art. The guys who actually work on the games can be in it for the art, and then they have to pitch to the PUBLISHER (Sony) that this is something they should spend money on.

Same as in the music industry, movie industry or even book industry; history is full of what is now considered literary classics being rejected by publishers because they thought there was no market for it.

Now I can see what you're talking about, you do make more sense. I will agree with the premise that a tiny minority of games are "art". However, I don't believe that Xbox 360 and PS3 are a better platform for the 'art' games. There are far more original IP, exclusive games on Wii which have small budgets and small dev teams (due to lower dev costs) and the market is present for these games whereas the HD consoles' audience is primarily the hardcore who want shooters and epic RPGs. Look at de Blob. Look at No More Heroes. Look at Madworld. Look at Okami. Look at Endless Ocean. All of these are original games that weren't expected to sell well but had artistic vision. All of them will make a profit on Wii that they probably couldn't have on the other consoles.

PS3 and Xbox 360 do indeed have better-looking games, but they are aimed at the masses for profit and have big budgets, big development teams and are milked for sequel potential if they sell. They cannot be considered art because the development teams lack the freedom to do things for art instead of revenue.

 Yes, the semiconductor industry is heading in the direction you described in order to maintain or beat the pace of performance gain of yesteryears.   AMD is working on such a chip.  Intel has the Lanrabee coming out 2009, but this is not a unified chip yet.  If Moor's law hold true until 2012, every two years chip density double, die size of 2005 will hold 8 times the chip density.  Using the 360 CPU (Xeon) for reference, we are looking at the possibility of fitting 8 Xeon (3x8 = 24 cores total) on the same die size.   So certainly, CPU and GPU on one chip is quite a possibility for next gen consoles.

If this single chip design is used, bandwidth should not be an issue as you said.

Some had said that they think MS and Sony will use the Nintendo approach and the next gen will be around 4 times the power.   I think we should wish for much more power.   Current gen PC which is already more than twice the power of current consoles, can not even run Crysis at more than 40f/s @ max setting.  And Crysis while a very beautiful game, there are still a million thing that can be done to improve the game in areas such as physics, graphics, AI.