Why next-generation games are so expensive

That beefed-up price tag--which also applies to games for Microsoft's Xbox 360--is a 20% increase over games for earlier consoles. That's because the game business increasingly parallels Hollywood: Each new game is a costly bet--many now cost north of $20 million to produce--that can pay off big or cost a company its quarterly earnings goal.

Those risks are magnified at the beginning of a game cycle, when gamers are swapping out old machines for the new models. It's hard to sell a blockbuster game to gamers who can't play it. Microsoft claims it will have sold 10 million 360s by the end of this month, while Sony will have sold 2 million of its newly introduced PS3s, at best..