Also, if Morrowind had Arena's graphics, it wouldn't have sold either. Good graphics are a part of TES series and video games have always been partially about graphics.
Though it is still ridiculous that one of ya main argument for uping graphic is because just to not to make it look like the Past TES. Not to mention ya assuming people would want graphic of the past back. Everyone pretty much know that is a given that the graphic is going to get a bit better.
Graphics are a part of the series, and those Elder Scrolls fans who would ignore that fact and believe that graphics mean nothing in an Elder Scrolls game are just plain wrong.
Ya assuming things again. People do not care for graphic as they do not want it see it as an important and want to see other thing Oblivion fail to deliver.
Graphics are more important to TES series than you seem to realize. Every Elder Scrolls game had amazing graphics for its time and graphics were always part of the reason they were sold. I would be fine with graphics equal to or only slightly better than Oblivion, but not graphics equal to Morrowind's and certainly not graphics equal to Arena's.
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TES series needs graphics to sell, graphics help with immersion, and they are a major part of TES series. I prefer good gameplay, but remember that graphics have always been amazing in Elder Scrolls games and it is not graphics that take away from gameplay.
And a again, ya assuming things again, namely that people want graphic from Morrowind / Arena.
Also, Graphics does not mean anything if they continue to water down the game to state it is in now. Graphic is there, but I prefer uping other department to actually making the game a game and not some sightseeing scenery.
Oblivion was simplified so Bethesda could have the game appeal to more people, not because of good graphics.
It ain't just for appealing to more people, the game was also rushed. Many things that the Dev want to add was remove.