Are Microsoft and Sony getting ready to release new consoles this year or not? That’s the main question on everybody’s mind at the moment, as reports begin to surface about the two gaming giants prepping successors to their existing consoles, no doubt as a response to the 2011 announcement by Nintendo regarding their next-gen device, the police siren onomatopoeia Wii U.

Epic Games, who know a thing or two about crafting excellent games with stunning visuals, recently spoke about the push for the next big video game console generation, with their Technical head Tim Sweeney saying that such devices will need to be “huge and fundamentally new” before such a jump can even be considered.

Sweeney described the current long-lived state of consoles a “mixed blessing”, as it becomes “harder to generate excitement from the same hardware”. “We have been able to ship three Gears of War games on the same generation of hardware, each one with dramatic improvements over the last and a two to three-year development cycle,” Sweeney said to Venturebeat.

So it’s been a very good thing for a game business today. With each new title, there is a bigger and bigger Xbox 360 installed base of users, so the games can sell more.

On the other hand, it gets harder to generate the same excitement from the same hardware. That is when the new hardware is justified. But then you reset the installed base to zero and it’s a lot harder to sell a lot of games again.

So you should only replace the hardware when you can make a dramatic leap in quality, not just 2X or 3X. It has to be huge and fundamentally new.

Having some pull within the Xbox division, Epic even convinced Microsoft to add more RAM into the console during its development, something that cost an extra “$1 billion” Sweeny says.

“They put in extra memory and that is one of the reasons we were able to make Gears of War look so compelling,” he explained. “Without that extra memory, we would have far less space for details.”

“That decision cost Microsoft about $1 billion, but you can say that it paid off big time. They would not have succeeded to the extent they have today if they had not done that.”

While its doubtful that a new console from either side will ship this year, the possibilities for games to finally breach that uncanny valley syndrome is present. Don’t believe me?

Then check out this video that Epic put together where they supercharged the Unreal Engine and pushed PC resources to the max in order to create something that showed off that possible future.