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thranx said:

It would still stifle hardware advancements, which is where game advancements come from.

Uhm, how is this true? What games this generation are impossible to recreate on last generation hardware? I can think of a few HD games like Red Faction, but most of these games would be on the Wii, Move or Kinect, most of which don't have much to do with the advances in console hardware.

thranx said:

Why would it be priced fairly? 

First of all, if there is a commission to handle how this all goes down, a loft would be set for the price of the console to make sure it starts at a decent price. Like $199 at the most for the basic console (and I mean really basic. No USB, storage, optical drive, network hardware, bluetooth and things like that), and then the companies can start adding stuff from there, like blu-ray, DVD, wireless, controllers, harddrives, etc. which would create competition as the hardware companies race to offer the best package. 

Secondly, each company is entitled to build from the parts they want. If they can get a better deal than others on certain hardware, or otherwise reduce their costs faster than the competition, they can gain an upper hand in pricing, like what we know from the current situation (albeit more limited).

thranx said:

How would there be competition for online networks if any network could play games against the other.

Because one service offers things the others don't? Microsoft can still charge for Live, but they'll have to step up their game to keep on doing that. If they can offer things like cross game voice chat, partying up and other services to their consumers, there will still be people who want to pay. All this "merger" of hardware will do is create way more competition in this area. Nintendo's current online setup would be used by three people: RolStoppable, non-descript Nintendo fanboy #42 and Iwata (when he checks to see if anybody is still left online).

thranx said:

Why remove compition from companies?

It's not being removed, it's being moved (and only partially at that).