Amid claims the traditional console business is on its last legs and reports about the power of the next Xbox and PlayStation 4, the boss of Avalanche Studios, the developer of the Just Cause series, has warned better looking games on next generation consoles "won't save the game industry".

Christofer Sundberg told Eurogamer that it is essential the next consoles from Microsoft and Sony combine the strengths of the Xbox 360 and PlayStation 3 with new business models so those who invest in making games see a suitable return.

Last month Ben Cousins, manager of Ngmoco Stockholm, predicted that in the next few years there will exist a free-to-play equivalent of single-player RPG Skyrim.

"I believe that single-player will be the next to be cracked in terms of freemium monetisation," he said. "And I'm talking about traditional, story-based, scripted, linear and non-linear single-player that we see on consoles.

"I am totally 100 per cent confident - I will bet large amounts of money - that we will have, in the next few years, a free-to-play equivalent of Skyrim. A game like Skyrim, where you accrue skills and equipment over time, that you can play for hundreds of hours, is actually one of the easiest games to develop for a free-to-play model. That would be a big hit."

Cousins said the future is freemium games where micro-transactions include gameplay features and functions that cause positive reactions. The average lifetime spend by a gamer here will be $60, predicted Cousins - the price of a new, boxed game. The difference is, however, that the audience for these games is potentially much larger than that for console games.

For Sundberg, who has teams working on next-generation games now for release in 2013 and 2014, Ngmoco's vision of the future is only "partly true".

"To sound exceptionally boring, I can't comment much on next-gen platforms," he said. "However, better looking games won't save the games industry - I can say that much.

"What companies such as Ngmoco have been talking about very actively in the press is partly true. Traditional business models are dead and if you want to survive as an independent studio you have to think outside the box."

Sundberg stopped short of agreeing with some commentators who have predicted the death of consoles. He imagines next-generation hardware fusing what hardcore console gamers expect with new ways for publishers to make money.

"I don't believe in the F2P model either and consoles are far from dead," he said. "How we combine the traditional consoles with new business models will be absolute key to success - not one way or the other.

"Since the recession of 2008/09 everybody has been looking for that Silver-bullet to save the games industry and jumps on every opportunity there is - developing a quirky PSN/XBLA game or building your own F2P game. That is suicide."

At GDC last month Unreal Engine maker Epic Games called on Microsoft and Sony to make the next Xbox and PlayStation 4 as powerful as "economically possible" to ensure both devices "remain relevant for another generation".

Reports have pegged the horsepower of the next Xbox at around six times the power of the Xbox 360. Others suggest visuals pumped out by high-end PCs using the DirectX 11 standard provide a glimpse at what will be possible.