What we need to happen
In order to continue dominance, upgradeable hardware is required - or else we'll meet the same boundaries of hardware within 1 - 2 years and then suffer for an entire decade before getting the much-needed upgrade.
Developers would spend millions of dollars, hours, sweat and tears into a game like that - but the results would be fantastic. They could keep the assets, which would make future sequels just require polish to the ever-changing graphics engine used and new levels, etc. Feature wise they could expand as the main job as been completed within the first game.
These days, games like Call of Duty require $80 million budgets (and now the latest COD: Modern Warfare 3 with a rumored $200 million budget), yet had worse graphics, sounds, no dedicated servers, and felt "same ol, same ol" when compared to the previous COD titles which leap-frogged each other in terms of features, graphics, sound in every future title.
Do developers throw away the assets and start from scratch? I don't think so. These studios need to realise that gamers come first and without them, they're nothing. Treat your core audience with respect like Valve do and you'll receive never-ending love from your fans, totally loyal and salivating at the mouth with every title you release.
The power of the future of gaming is in the hands of console makers and developers. If console makers can realise the market has changed and a corporately driven market won't sustain the growth we've seen in the last 6 years, then the market will flourish and so will the level of talent, developers, gaming and games themselves. Customers will want the latest, best thing out and if you're constantly giving them this with upgradeable consoles and totally next-gen games, you'll never be out of pocket.
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