I don't think producing games for an HD console is necessarily more expensive that producing games for an SD console. Look at all the PS 1 games that were re-released on the PS3 with little to no modification. You can still make the same kind of games as before, your options are just expanded to support higher resolution graphics if you like. The competition might be more fierce, though, with HD games getting more of the market than the games that don't have such flashy graphics. But having a console dedicated to SD won't eliminate the HD competition, it will just limit what the developers (small and large) can do on *that* console.