The Razor&Blades model was wrongly applied for video games.
SOFTWARE SELLS HARDWARE!
^This is the golden rule of the industry. Not "hardware sells software". They were not supposed to force hardware sales, hoping that once they have a console,the users will automatically buy games. Software is the tool to get the customers, and hardware is the material product.
Software should be the razor, given away for free, or for very low price, and it should convert people to buy their profitable hardware product.