The next generation of consoles could shake up the games industry, with a game costing tens of millions of dollars to develop, say experts.
Sony is already planning a successor to the PS2
Making a title for the successors to the PlayStation 2, Xbox and GameCube could run into $20 or $30 million, game developers meeting in London were told.
But the price of a game in the shops is likely to stay the same.
It could mean many smaller software firms going bust or joining forces with other small companies.
Software companies have found the transition from one generation of gaming platform to another difficult, hitting sales and raising development costs
"We are very scared about the potential cost of PlayStation 3 games," Jez San, Chief Executive of Argonaut Games told the Games Developers Conference being held in London.
"Retail prices are not changing but the costs of development are increasing."
"This explains why the games industry is going through a consolidation this year. Consolidation is inevitable."
And he had an ominous prediction for the audience of game developers gathered at London's Earls Court conference centre.
"We have maybe 500 small development studios at the moment. We could have just 50 in two years' time."
"The market has grown up. There's no market for bedroom programmers anymore," said Mr San, who started off as one himself. "You won't make any money."
His comments were echoed by other industry figures who are preparing for the next generation of consoles to appear in the shops in two or three years' time.
"It is going to be a huge challenge dealing with the next generation of consoles," said David Lau-Kee, Chief Executive of Criterion Software which is behind titles like Burnout and Airblade.
The new consoles could have up to 1,000 times more processing power than current models and benefit from enhanced video and audio systems.
"There are enormous technical challenges ahead with the new consoles," said Jez San of Argonaut. "And it is not just about content.
Gamers are expecting more from next gen consoles
"Consumer expectations will be higher. They will want games that look and play better on the PS3."
It means the people making games are going to produce better and more advanced titles which are going to more time and money to develop.
"Games that take four or five years time now could take 10 years to develop," warned Ian Shaw, chief technology officer with games giant Electronic Arts.
He said the games industry had to become more efficient in the way it created games, looking at faster ways of turning an idea into a compelling interactive experience.
The Game Developers Conference Europe runs at London's Earls Court conference centre until Friday.
It is part of London Games Week, which brings together a range of industry and consumer events around the capital.