Okay at the rate of repeating myself...
Reasons why third party sales will increase.
Developers caught by surprise in regards to Wii success and are only just now beginning to catch up.
Cheaper development, due to lower graphics, means more resources can be devoted to fine-tuning gameplay/marketing
Middleware will get better
User base will get larger
Newer gamers will start to be interested in other offering over time.
Hardcore gamers will buy more Wii's and 3rd party games once their is something that piques their interest.
Developers and gamers will evolve and begin to understand what works and does not work on Wii (just like on DS)
Some reasons why sales will always be held back.
Many "Core Gamers" (which is no longer Core to the market) will always desire more of the same with shinier graphics.
Many developers are will still make high budget games on HD consoles.
Even "Core gamers" who do like the Wii will still divided purchases between HD/PC games and Wii games.
The large amount of games (good and bad) will divide up possible buyers and prevent many games from reaching massive sales. (Ex: Would Gears of War have sold as well if it had come out after Halo 3)
There are many other factors. I think overall sales will increase but will never match PS2 numbers for individual titles (minus newer markets). Overall, 3rd party sales will go beyond in terms of profit. EA made a ton of money off of MySims, other high profit titles include Rayman Raving Rabbids, Carnival Games, RE4, REUC, Lego SW, High School Musical, Sonic and the Secret Rings, Cooking Mama and a bunch of movie/tv show games.
I would cite regulation, but I know you will simply ignore it.
