This can't be emphasized enough- the only reason nothing has moved forward is because gaming hasn't paved the way. Most major hardware advancements on the desktop we've had have been a result of devices added for higher requirements in games. And right now, with the death of the B-tier game studio, there's no one pushing PC-only experiences that really has a reason to ignore the consoles. That's it.
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.
I have to disagree with the statement no on is pushing PC-only experiences. Epic is pushing UnrealEngine4 as potentially PC-only unless the console makers step up.
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.
You're putting the cart before the horse. The reason that performance has not improved in the desktop and gaming are due to hitting fundamental limitations in the design of hardware.
The PlayStation 3 has 256 MB of RAM, not exactly on par with a current PC gaming system, which can easily have 16 GB.
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.
Gaming PCs also have a general purpose OS on them. It's not an apples-to-apples comparison. One is a general purpose computer, the other is a device designed for a single purpose.
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.
But the hardware IS getting faster! Each successive release of GPUs for example still brings big performance improvements, us PC gamers are just going from 100FPS to 120FPS with a new card. People are running games at 5760x1080 resolution across three displays with just one mid-range graphics card, with anti-aliasing (and all the other settings) turned up to the maximum. Current games just don't make current hardware break a sweat.
Graphics cards are getting better, but not at the rate they did, say, a decade ago, and graphics cards are a small driver in the consumer computer market outside of games.
As far as I've heard, we haven't hit that limit in the consumer space yet, as we're just starting to get close to hitting it in other spaces. Is this not true?
We have hit it in the consumer space. A powerful processor from three years ago is still a decent processor today. That was not true in, say, 2000. This applies in consumer computers and high performance computers.
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.
Console manufacturers would love to have a new one to sell
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.
Other than the Wii, that is often true. The business model is selling licenses to game developers for the games to be sold for that console. Maybe, just maybe, they'll make money on the hardware at the end of its cycle.
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.
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.