Its a good article, but its nothing we haven't seen before.

Wow, they didn't blame it on Wii

Well, not from forum posters. Most of the articles that are written do not take this into effect. The article is right: we usually hear about the "economy" being the problem. This is one of the first articles I have read that has accuratly portrayed the elephant in the room: rising revenue and rising losses. HD model is broken, the industry will recover faster if the hardcore journalists accept that fate.

A big part of the problem is that many gamers now expect every game to have advanced graphics. The bar was set too high by publishers and the reversal of this trend will be a painful process.

Of course this is not much reason to feel sorry for publishers, in fact this over-inflated heightening of expectations has been a constant throughout the years. The problem is that the breaking point has now been reached for a big percentage of publishers, and there are few rich publishers left to assimilate others.

I'm thinking that publishers are just sort of going to have to bite the bullet now, and accept this is how it is and get on with it. Keep investing money into the HD systems, keep building engines, middleware, get their franchises selling, get more studio's equipped to make HD games and more employees trained to it. Once it's all set up and ready to go costs will fall, eventually, just got to hope Sony and Microsoft don't keep pushing graphics even further with their next consoles. Can't see that happening.

Of course doing that costs money, which to me is why the model of using DS and Wii games to fund HD projects sort of makes sense. They don't bring in huge streams of revenue but when you're releasing stupid amounts of PetZ and MySims spin offs it soon adds up.

In the short-term it'd make more sense just to invest everything into the Wii and DS where profits are easier, but I guess the inevitability is that HD gaming will be a standard accross all consoles next gen and handhelds are getting more expensive too. IT's better getting yourself prepared for HD developement, and getting it as cheap as possible, while you've still got profit streams from other systems.

I can't really see the industry going else where until Digital Distribution becomes the standard, if that happens, and that's a long way off. I do think this article does push hyperbole at points, but the sentiment is accurate.

But they are laying off and closing down studios due to the HD projects. How can they afford to keep investing in it if they are being killed by it?

No problem, they'll just borrow money. Oh wait, we're in a credit crunch...

Edited the original post to tidy it up a bit.

One thing I liked about this article is that it doesn't degenerate into bickering over where developers should spend their resources. (We've had a gazillion threads on that already.) In fact, there's no mention of Wii at all, and barely any talk of PS3 or 360. The sooner everyone can start discussing these industry-wide issues without falling into fanboy bickering, the better off we'll all be.

Also, any article that concludes with "we need more Portals and fewer Grand Theft Auto 4s" is surely on the right track!

So HD consoles are expensive to develop for? That's not news.

So anyway, the videogame industry is doing better now than ever before. Go videogame industry!

Heck, the most current generation systems I've ever owned before was 3 (SNES, GB, and SG). I currently own 4 current generation systems. There are more systems, more games, and better sales now then ever before.

It's not that HD consoles are expensive to develop for per se. It's that they allow for more spending in graphics, which became the norm for practically all retail PS3/360 games. It's an important distinction, in that developers could potentially make cheaper HD games, as long as they sell (which as I said may be a problem due to the current insane expectations).

And no, the videogame industry is not doing better than ever. Record revenues and low/no profits sums it up quite nicely for most publishers.