New information from analysts at Screen Digest today says that only a small amount of next generation console titles will be profitable due to an "increasingly difficult environment" for developers.

This increasingly difficult environment comes from the increasing complexity in games development, and although from the gamers point of view, great next-gen titles such as Gears of War and Call of Duty 3 only come with million dollar investments, it is estimated that investments in next-gen game projects is not likely to make a return on profit before 2008.

To cost cut, developers have been forced to release games on many different platforms and producing games based on popular movies amongst others. This could mean poor quality games in the future, because as true gamers will know, there's nothing worse than a game which has been badly ported to another system.

The big guns, Microsoft, Nintendo, and Sony have tried to circumvent a developer shortage by expanding their own personal game studios, with Sony 2,200 development staff across 14 studios; with all but one of these studios working on PS3 titles. On the subject of the next gen console war, Screen Digest report author Ed Barton said:

While the previous generation was quickly dominated by Sony's PlayStation 2 across all major territories, this time we anticipate a more competitive situation where market share is likely to be split on a territorial basis.

Hopefully the investment of the big three console manufacturers in development teams should enhance next-gen gaming, but as for the independent publishers and studios, it's going to be a bit of a struggle to stay afloat during the following years which will be critical to their survival.

Via GameDaily