Wiii U, PS Vita Canaries in a coal mine of a dying console industry?
Wii U and Vita (3DS outside of Japan, too) return stunningly low sales numbers (matching the low of PS/GC/Xbox era) and big name software bombs that are going straight to discount (Dead Space 3?) right after realease
I don't think it's done by any stretch. Under pressure for sure. It probably will shrink by 25% or so from its 2010 peak, but I don't see it going away. Phones/tablets will shrink (or have already shrunk) the handheld market but there is still room for dedicated machines that have better controls etc. That may not hold true in 10 years but for 3DS lifetime it looks like there will still be big demand just nowhere near DS/PSP level. Consoles will potentially get pressure on the casual side from Ouya and from the hardcore side from Steam especially if Steambox can deliver PC like performance with upgradability for not much more than a PS4
However, people will still want to play games in social settings something phones and tablets can't offer yet. Things like Skylanders Giants are mega-sellers that will hook kids. College kids will still want to play Madden in their room with friends. People will still want to play top games like Mario, Halo etc. on whatever type of console comes along. Maybe they will play Mario on a Sony or God of War on an Xbox if the industry shakes up, but there will still be an industry.
I still think there is a quarter billion+ market for these consoles. Its just that that pie cant be cut into 3 or more pieces or they all fail. The WiiU is DOA. So that leaves SNE and MSFT to cut that pie right now. Talks of steam box and that other thing could complicate it.
quarter billion? Seriously? Let's say the average console sells for $200 (awfully low but whatever). That implies only 1.25 million consoles sold per year (I presume you are talking yearly)? That's hardware only. The nearly dead Wii sold 5 million consoles alone last year and the struggling Vita around 4 million. If you think it will retract that much I think you are way off.
Are you talking profit? Maybe. I think there's a lot more available than that. Of course last generation MS and Sony seemed to be determined not to make any money so if they repeat that then indeed maybe only a quarter billion gets split up if Wii U does in fact fail leaving 250million in profit to be taken in by 3DS.