Now, whether the next console tier will actually allow that or not? I don't know. Investors seem to be catching wind to just how low-margin the games business is, and as a result seem to think social gaming is the way to go(if Zynga's large and horrible decline hasn't convinced you that they are wrong yet, give it time. It will.)- which means less marketing dollars justifying that new console, and thusly, less reason to push the desktop.

But we haven't stopped because there's no more need. Just, the market is in a bit of a wonky place right now. Console manufacturers would love to have a new one to sell, but developers are pushing back because to actually develop at the kind of fidelity required to go past where we are now, your average game's budget will quickly double or more, with few returns in terms of profits- those margins just keep getting thinner.

Then there's Arma 3 just around the corner.

From my point of view, as a PC gamer, the reason there's not so much investment in using the PC graphics capability we have cheaply available right now is because of the influence of the console market. Most big budget games right now are made for the current crop of consoles which PCs outpaced years ago. Too many times the PC version is just the 360 version with UI changes to support the mouse and keyboard. You can look at the graphics mods that are being made for games such as Skyrim and GTA4 to see the wasted potential.

Also, it's really, really expensive (as you point out) to make a game that truly pushes the capabilities we have right now and very few developers are willing to do that, it's a huge risk. Part of UnrealEngine4's development are attempts to address this by providing tools to help reduce the time necessary with the creation process.

But not all games need high graphic fidelity, that's not the whole story. The true waste is the pure amount of cheap computational power we have available with both the GPU and CPU that's being wasted. Screw photo-realism, I want more physics and AI.

The tools are there now. You can make an outstandingly impressive looking game with UnrealEngine3 right now if you ignore restraints of mainstream PC and console hardware. Look at the Nvidia and AMD tech demos for their cards to see what they can do.

But that game would be expensive, time consuming, and not worth the investment if you were planning on making money.

I would say it's better to describe it that they are waiting on tools that allow them to do more with the same time and money budgets on current or next-gen hardware. That's where things like UnrealEngine4 make it interesting because it seems that Epic is saying that PCs are under-utilized graphical work horses now and don't want to wait for the consoles to catch up. It's potentially a huge risk for them to take and it'll be fun to see how it plays out.

To me the tools thing isn't just about graphics, it's about development. Proper tools make high quality games cheaper to make in general. As an example, let's say you want to make a big open world game that has hundreds of indoor locations. You have a team of ten to create those indoor locations. If you can use tools that would allow a team of five people to do the same amount of work in the same amount of time as ten on the previous project then you have two choices. You can reduce your team to five to make the same amount of content for lower costs (and probably being better) or you can keep your ten to create more content for the same costs as before.

If you look at the UnrealEngine4 demos they are just as much about content creation tools as it is about graphics in general.

I would argue that the rising production costs to produce games that actually make use of ultra-advanced hardware are more to blame for the slowing of the graphics race.

You can always do things faster by doing things in parallel. It just gets much harder to program them.

But that's beside the point: the games industry drives the graphics card business, but that is only a one part of the consumer computer business. General purpose processors are a larger part, and processor performance improvement is not the exponential curve it was a decade ago.

For a long time, processor architects were able to increase the frequency, increase the cache size, and increase the pipeline depth (to allow for more instructions in flight at the same time) to yield more powerful processors. As Moore predicted, processor architects kept getting more transistors to play with, and they were able to make processors more powerful by making designs that were "like the old one, just more so." But they've hit fundamental limits in the design: increasing the clock speed and the pipeline depth at the same time means that you have to communicate the same amount of data over a longer distance in a shorter amount of time in the silicon. We've hit the point where it's not feasible to do that anymore.

Hence, multicore. Processor architects are still getting more and more transistors to play with, so instead of using them to make a single core more powerful (as they did for a long time), they're using them to make multiple cores. But you no longer get the "for free" performance boosts that you did when you increased single-core performance. Now we need to change how we make software to take advantage of this new hardware. And some software can't take advantage of this new hardware.

Why? Don't they pretty much lose money by subsidizing them for a few years and only start breaking even after a long haul? I thought they made their money on game licensing.

The licensing deal is also often why sometimes the PC version is five to ten dollars cheaper than the console version. You need no one's permission to publish to the PC market.

While I agree games propel hardware forward, I believe it's the combination of a graphics plateau, diversification in gaming, and the end of the free ride on Moore's Law, which the article pointed out. This generation of AAA games run arguably the prettiest graphics ever seen. But this comes at a cost of complexity and sheer hard work to build the environment and models, without the wow factor of a major leap in graphics quality. Crysis is still the Gold Standard in what gaming graphics can do, and that was released five years ago.

We are also seeing a large and unique divergence in gaming in the form of indie titles. Indie games, by their nature, could never compete pound-for-pound on the graphics of AAA games. They made up for this in experimental gameplay and embracing a unique graphics style. Before now it was very difficult to get an indie game exposure and the art of building said game was difficult. Now the game development toolchain has improved by orders of magnitude, and the advent of app stores on tablets and smart phones makes distribution and monetization much easier. Tablets and smartphones likewise bifurcated gaming. Tablets couldn't render the graphics or use the raw computational power found in the latest PC and console titles. This made them a natural home to indie titles.

There is also something to be said about Zynga, Facebook, and the whole crop of casual games that sprung up in the last five years. Suddenly the gaming market had many more diverse demographics they could effectively target. It's no longer the 18-25 year old male that was the prime gaming market. These titles don't need the raw computational power of next-gen consoles or the latest PC hardware. They run fine even on netbooks and tablets.

In all, I do believe that gaming was a primary driving factor in hardware development. In recent years video games have become a much more diverse ecosystem, many of which don't require the raw hardware power.

I don't know how you can say that this generation of AAA games is the prettiest ever seen, and also say that Crysis is the gold standard - this is kind of my point really, things have stagnated. Games run faster and faster on "current midrange hardware" (however you care to define that) but aren't really looking much better.

Your points on the video game market massively diversifying are extremely valid though, it's true that the disposable income upgrade-chasing 20-something is no longer the most luctrative or important demographic.

Additionally, I very much take issue with your statement that Crysis, a game released in 2007 is still the "standard" for graphics intensive games.

The games that are pushing the bounds of PC hardware are games like [1]The Witcher 2, games which are huge improvements on [2]Crysis.

[1]http://cdn.ripten.com/wp-content/uploads/2011/05/witcher2-20...

[2]http://oyster.ignimgs.com/ve3d/ve3d/image/article/745/745255...

On the mobile side however, the recent performance increases have been very dramatic, just like in the early days with the 386 and Pentium and stuff.

So with desktop demand tapering off, the performance jumps taper off. And with laptop demand still strong, performance jumps there remain strong. And with mobile demand sky-high: the performance jumps there are as high as computing has ever enjoyed.

If anything, consoles have been languishing for the same reasons desktops have been: there's simply not a lot of demand for a bigger/faster console.

Sure, eventually there will be new ones; just as Intel inevitably releases new motherboards and chips, despite soft competition from AMD and flagging demand. But the growth and clamor isn't there and the performance increases likely won't be either.

Meanwhile, laptops are maintaining their 20 - 40 watt profiles but are gaining performance. They are converging to that low power threshold. The tablet space is even lower, down to 5 watts in some cases, averaging from 3 to 10, but still, that is a convergence point.

It also doesn't hurt that AMD tripped over their own feet for a while and Intel is resting on its laurels pumping out higher performant CPUs without AMD to compete with at the high end.

Meanwhile, the graphics card business is heating up, the 7000 and 600 cards are upwards of 30 - 40% faster than the previous generation at much lower TDP, the Kepler architecture is extremely vector processing optimized to a fault in that it is worse as a gpgpu device than the 500 series, while the AMD Southern Islands chips are very generic cores optimized for GPGPU when their last few generations were graphics optmized, but in both regards they are markedly higher performant and consume much less power than many older gpus.

The advances are still there, they are just going in divergent directions. Nothing is stopping Intel from making a 32 core i7 with hyperthreading on a 500mm die besides the heat associated costs and tremendous production costs, but nothing on the market would utilize that. So they invest elsewhere.

The next generation of consoles isn't looking so bright either - they all seem to be targeting AMD gpus, and the WiiU will probably be using a modified 68X0 and the Sony / Microsoft camps will use the 78XX cards. They even are considering using FPUs. The gaming performance on the new hardware won't be that radical as the last time because the lower margins means they can't make extremely customized gaming hardware like back in the RSX days.

It seems to me that problem here isn't cannibalization -- if Microsoft hadn't done it, someone else (Sony?) would have -- but the "let's leverage our monopoly-driven money tree" mindset. XBox was dumped on the market at a loss, subsidized by Office/Windows and leveraged by Microsoft's dominance of desktop gaming, APIs, and developer mindshare.

Microsoft doesn't even try to play fair in new markets and eventually it had to bite them, and it did.

For the leading edge of the desktop PC market, definitely (advanced graphics cards, fastest possible processor, fastest possible RAM).

On the other hand, the broad center of the bell curve of the desktop PC market has been driven by office applications. These have never needed the high performance that the gamers demanded - users simply wanted something "good enough for Word, Excel PowerPoint, and email".

The pressure on consoles will come from tablets (the next generation of Imagination Tech's GPU IP is comparable to xbox360's 7 year old GPU).