Epic Games president Mike Capps says he knows the bar's been set high for Gears of War 2, in a climate that's more competitive than ever.

Games' price point has remained fairly static in the $50-$60 range, Capps says, while costs increase much more quickly. And market growth hasn't balanced these steep costs, resulting in what he says is more people creating games for a smaller share.

"As a result, we decided to compete in quality, not size," he says, discussing the issue as part of his talk at the GC Developers Conference in Leipzig. "If you play Team Fortress 2, that's a great example -- they have a small number of maps and some of them are remakes, but the quality is so high."

Still, Capps says he's a bit worried that Gears of War 2 might suffer in reviews and reception from the high expectations set by its predecessor.

"Players expect more than before - 'the game is already half done, right?' but most sequels have less development time, and indeed we didn't get much pre-production time. It's really hard to eke out pre-production time for a sequel. The lesson is to compete in novelty, not size."

"It's an arms race," Capps says of the game industry, and according to him there are four strategies for surviving an arms race:

"One, have the best guns. Two, have the most guns. Three, sell guns." In many ways, adds Capps, item three is Epic's plan -- standing back from the war by selling its "guns," the Unreal Engine, to everyone else who can use it to fight for supremacy.

Fourth, "Move to Switzerland," says Capps -- "Sorry if there is anyone from Switzerland in the audience, but what I mean is, just stay out of the war and do your own thing and expect it will work out."