No, tablets and phones are eating into the handheld market but not consoles or PC. The handheld market and console/PC market have always existed side by side and both have done well. The only difference in the future will that the markets will be; the consoles/PC market and the tablets/phones/some kind of less important handheld market.
The consoles will simply adapt and become even more reliant on multimedia and online functionality as a counter-measure and the PC will always live in some form.
To think that tablets and phones will devour the gaming industry is silly.
kitler53: MP3 players and cameras are different, you can implement decent cameras and MP3 players in other devices. Gaming as a media will lose all its impact and sense in tablet/phone-only form, the huge screens, tight controls, massive sound etc. It would be like saying that the cinema is soon dead because everything will be on small handheld devices; too much of the experience will be lost in translation for media as big as movies and games and a screen with a few inches across and pathetic sound output and silly controls will never be able to replace that. One could argue that; well, you just hook your device to the TV or use portable speakers for the device (but the sound and picture output won't be very good compared to a dedicated device). Well, then that sort of removes the purpose of the device, doesn't it?
No, games in their current form will survive and so will movies.
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