I agree with you. The development cost is constantly increasing. Games are taking hundreds of millions to make, so his quote makes sense. Wasn't Phil talking about something similar in the leaked email, that people were talking about a day or so ago.

Though, as consumers, I understand people's reaction to this too, no one wants to pay more when they can pay less. But I would rather they increase the cost, instead of going the micro-transactions route (for single player games).