As far as I understand, new generation devices do provide better hardware than old generation devices.
Better meaning e.g. more memory, better graphics, bigger storage. Agreed?
From a business case perspective, a game studio has to decide to either not support old gen, or to support old gen and new gen in parallel.
Usually, and with regards to sales figures, they decide to support the latter.
Now, knowing that they will support old and new gen, they have to make another decision. They need to decide whether to have a single code base or two separate ones.
A single code base which supports old and new gen will have to use the maximum capacity of what the old gen provides and, hence, not make use of any advanced feature of the new gen. Otherwise, it would not run on old gen.
Two separate code bases would mean to maintain two different dev teams - one for old gen and one for new gen.
Usually, the latter is not very attractive from a business case perspective. So most studios, if not all, decide to support older and newer platforms, but limit the features to what the oldest platform is capable of.
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