I think Oblivion pretty well handicapped itself. Didn't the sound files take up almost half the game's data? And even then the conversations were horribly forced.
With less voice-acting, there's room for more lore and conversation, and they don't have to spend as much time recording all of it, which means yet more time goes into content.
Then again, there's always the option of a strong text-to-speech program.
You are however assuming that TES5 will have the same budget and dev cycle as 4 which I highly doubt.
Pete Hines has been quoted as saying there is still too much conversation, actual dialogue itself and they are working on paring it down, getting to the essentials, from a writing standpoint (from his interview about Shivering Isles). He's not referring to voice-acting either, but the fact that so many players click on through even the spoken dialogue. Morrowind was horribly overblown IMO with a lot of pointless information that was, yay fun lore, but ultimately far too dense and not all that well-written to be interesting. Brevity, is indeed the soul of wit. Plus, the game already has one of the best systems of lore-storage which is the myriad of books you can simply read, in-game, if you fancy that sort of thing. Add more books, and streamline the voiced dialogue. When I talk to an NPC I'd much rather be having a conversation than feeling like I'm putting coins into an info-matic, picking a category and having it spit out all this needless information at me.
Also, voice-over recording is not quite as costly or difficult as one might imagine. Sure if you have to pay SAG minimums then it can get pricey but Bethesda can NOW afford to maximize their voice-over possibilities instead of hiring three big actors and blowing their whole budget on that? Did it REALLY matter that Patrick Stewart, Sean Bean and Terrence Stamp were in Oblivion? I venture a guess that some equally talented voice actors with a much lower paycheck could have pulled it off and left room in the budget for more variety and a voice director of some real merit.
As for file-size, that is pretty much par for the course these days, sound is always the largest chunk of a game (unless there is some sort of DRM chunk like Bioshock 2 had). Most actual gamedata rarely amounts to more than 2 gigs for a modern triple-A title and the rest is usually sound. Also, sound codecs are getting very advanced and a WAV file that was 2mb when OB was released could probably be optimized down to 20kb with no noticeable quality loss today. To me, it isn't a handicap that the game takes up so much space, because on my 320gig hard drive I'd gladly delete every other game I have to make room for this svcker! As for the console players, get ready for more multi-disc games, mandatory blu-ray games or installations onto your console.
As for text-to-speech, I actually heard that used for a mod and it was surprisingly okay, not perfect and man it would get tiresome after a while, but whatever program the modder used was better than many I've heard before. But no, good old-fashioned proper voice-acting (Dragon Age or Mass Effect quality but on a grander scale and without costly celebrities that do NOTHING) is the only way to go for me at least. If someone can live without it that's fine but if they want to get me truly immersed in the world, they gotta step it up big-time in that department, hehehe!
bliviongate: