Assuming that every console sold last gen sold to a different human and no one person owned more than 1 console we would have 300m different people on consoles. With 7+b people in the world that means about 4% of people play video games on consoles. Now, knowing that some people buy every console each gen and such that percentage goes down.
Yes, in the grand scheme console gaming is niche. Is what it is.
That doesn't mean consoles are a narrow market and are coming to an end. Next they'll be saying computers are a niche, or that USB drives are a niche.
Nothing about the word niche indicates decline. Video game consoles are, however, a narrow market. Not to say it can't be expanded, but it is niche. Especially when you take it as part of its product intention of entertainment.