That depends greatly on the way the market shapes itself based on consumer actions. At the moment, the most likely course of events is that the Wii's disruptive paradigm shift (that is to say, the introduction of motion controls and a greater focus on user-friendliness) will result in the industry getting revitalized more effectively than a simple incremental upgrade (or generational shift), but in favor of these changes over hardware upgrades from previous models. Basically, the industry's values are currently shifting.
However, the immediate side-effect of this is that the previous industry (that is to say, the gaming industry as currently represented by 360 and PS3) is inevitably going to go into decline regardless of its previous state. That is, of course, one of the more infuriating parts of trying to predict how close the game industry is or was to collapse; since Nintendo disrupted the industry, we no longer have an easy way of measuring its past decline, and since the disruption is still in its early stages, we can't say for sure how truly effective the disruption is at revitalizing the industry (though evidence suggests that it is very effective indeed).
Should the shift be successful, at least for a while, we will see a different set of values prevail in the industry. Instead of "more, bigger, better" being the credo of success, "unique, user-friendly, widely appealing" will be how to get sales. This could easily switch back to the "more, bigger, better" model once the Wii has run its course, however, if there isn't another disruption to follow it up.
Sky Render - Sanity is for the weak.
