@Gypsy: I agree with what you say mostly. But let me put another two examples here (this time from Gen7) to make myself a bit clearer on why I think Gen7 was not as innovative as it should have been:
Before the PS3 was released, there were talk of PS3 game everywhere. One of them I remember clearly was SplinterCell Conviction. One thing they had showcased was how Sam would pick objects up. It was important because in Gen6, objects would just disappear and then appear in the character's hands. So it showed some pictures of Sam picking up different objects, putting his hands at the appropriate place before standing up, and there were talk about how he would hold the object would depend on how you would hold the SixAxis controller. There was another aspect as well which I don't remember as clearly, but it showed Sam in a crowded place, and it talked about how each person in the crowed has his own AI and his own personality. That each of these could sense danger separately, etc.
Then at the start of Gen7, there were very important technologies. Most significantly in GTAIV, people would latch on objects, they would lose their balance, cars behaved way more according to physics than in any Gen6 game. Or for instance in Assassin's Creed, Altair would find proper places to put his hands on while climbing, something never seen before. I remember there were talks of AI cards for PC.
However, after some time, the innovation and introduction of new technology suddenly stopped. I believe the success of Wii and Call of Duty convinced game publishers and designers that marketing is more important in games than the actual games. That's just what I think, I honestly haven't put a hell lot of thought and research into it.
But one thing was obvious for me: Conviction was release and it had none of the things that I had heard about before the release of PS3. All of those were possible. Yet, they were abandoned, the final game was to a certain extent a copy of all the shooters released before. or rather, the designers tried really hard to make it like the other shooters even when it was not.
And that's the whole deal. I don't think in Gen5, any AAA title developer felt that they should change what they have made to make it more like a certain other game.
So yeah, I agree that obviously, game industry's sole goal is to earn money. But know that there is no "peak". Technology can and will always advance. The difference now and Gen5 is that, in those times the companies felt that they had to put new technology in use in order to sell. These days, they believe they should just advertise a hell lot. More than half of any game's budget goes into marketing, and it's going to grow. It will grow so much that one day if it goes on like this, you realize that they're putting almost all the budget on advertising, and almost nothing on actual development. And that would crash the industry obviously. And if that is to happen, we have no one but ourselves to blame, since we were the ones who bought into their advertisements.
To sum up, imagine if in Gen4, the companies were rich enough that they could just continue selling their 2D games through advertisements, there was no need to implement that shiny new 3D technology. We'd still be stuck with 2D sprites today if that was the case.