Selling 500k+ for most games is still considered a success, as the game should break-even or return some profitability. This article is mainly referring to high budget titles and the big issue with them is the way they are given excessive marketing budgets, development budgets AND are expected to generate enough profit to make up for the lower budget titles that failed to turn profitable.

The answer to this problem is to learn how to reduce the cost of high budget titles and for the industry to actively teach various consumers that they should be buying the high quality AAA budget titles for there consoles and not "casual mini-game collection 8,567: this time we got 40% on meta-critic"

The consumer is plenty educated about what they want to buy - companies don't neeed to tell them that. Consumers need the companies to adapt to them.

1 million and one then?

Makes sense, cut development costs and shift the money to marketing.

Now I see why PS360 games are $60 and why Wii games are $50.

Ain't that the truth... typically companies realize this, especially when they're shoveling money down a hole, you'd think they get the hint after the first few times making an expensive project costs them millions.

One of the big issues is that everyone is gunning for the core gamers money by making the biggest baddest game out there with the biggest baddest budget, and they're doing this multiple times a month, not once a year, not once every few months, there's a high budget game coming out every other week it seems and there are only so many "core" gamers that will buy those games.  You can't get sales that aren't there to have, you gotta market towards whats there instead of what isn't and make sure that crowd is large enough to make a nice return on your investment.  

Nintendo knows how to make agame with low cost , and graphics that arent realistic but they are clean. that is bought by tens of millions of people. I had more fun playing Brawl than Modern Warfare 2

I kind of what to know where those 10-20 millions dollars go to during development, cause most games with such a budget recently have sucked pretty hard. I can't fathom how they spend so much money and make games worse than people years ago....

And Poliphony Digital knows how to make a game with good, realistic and clean graphics, that are bought by tens of millions of people. I had more fun playing GT3 than MK DS

I think one should not take this out of context.

Not every game cost a fortune to produce. Saying that, big budget games do come across as more polished and refined.

I bought a HD console for the graphic capabilities and "realistic" looking games. IMO that's an important part of a game. Some will obviously disagree but that's you and this is me.

If developers turn to making crappy looking games to save cost I am better of with my wii - no offence to the wiisters.

This is nothing new in many ways. That is why so many sequels are always being churned out. To save\make money.
It is now far too risky to create a new AAA title, better to spin off Halo, put out another GoW, Left for dead etc., and make some guaranteed money.

This economic problem I believe will mostly affect those looking to develope new engines for new, big projects.

If you have a good engine it is best to license it out to "friendly" developers who in turn might help improve on it.