And even the clones breed sequels. Game development today, for any significant title, is a significant undertaking. Development teams can be quite large when you consider that programmers, artists, musicians, designers, testers, level builders, 3D modellers, and even more specialty disciplines are often required. Games are also more elaborate than ever before. We've come to expect flashy graphics, original sound and music, long campaigns, and depth of play.
Complex games are harder to develop and test, especially with multiplayer thrown into the mix.
This protracts the development cycles and again increases the cost to develop a game. There is manufacturing, marketing, etc. Add to this that the developer only gets a small fraction of the revenue from sales. The publisher gets some for their work, the retailer takes a big chunk for giving the game shelf space, there are shipping and distribution costs, etc. And so the number of copies needed to break even rises, and rises, and rises.