DRM is hurting PC gaming more than anything. I don't think console gaming is necessarily harming PC gaming. Here is the deal: When developers make a big-budget videogame that requires PC specs that a big chunk of PC users don't have (remember: many people are shifting away from desktops to laptops now and lots of people that do have desktops don't want to spend the money to upgrade or don't have the know-how to build a rig), their not going to have that big of an install base of gamers to work with. That's where the home consoles come in. Ever notice how Blizzard games stay PC exclusive? It's because they make games with modest spec requirements. World of Warcraft: Catacylsm can probably run on a pretty old laptop and Starcraft 2 can run on a number of laptops as well. My two year old Dell Studio should be able to run Starcraft 2 no problem.
You will see exceptions to the rule like The Witcher 2 but CD Projekt RED employs cheap Polish labour to keep costs down ($7 million development budget apparently) and The Witcher and CD Projekt itself has built up a huge cult following on the PC end. It's not every day that a PC-exclusive game is as successful as The Witcher 2. This is why you're starting to see modest spec games like World of Warcraft, Starcraft 2 and the Sims as well as small-budget indie games (ie. Terraria) dominate the PC gaming space. A game like Terraria is cheap to make and can reach a whole lot of PC gamers (game can run on an old laptop).
