In reality, this would be awful. The price of the console would be outrageous and overpriced. The console and games would be half-assed due to the lack of competition. The competition to win our wallets (not our loyalty) drives these companies to make better games and products, and to be more innovative. If Microsoft never joined the console market, PSN wouldn't have PSN+ (if online multiplayer would be that advanced). If Sony never started making consoles, console gaming may not even be as big as it is today and blue ray wouldn't have taken off. If Nintendo didn't join the console market, motion control/gesture control gaming wouldn't be as big and consoles wouldn't be as innovative.
MS pushed for broadband internet (in 2005, everyone thought this was terrible and despised XBL for requiring it). Things are better for us now.
Sony pushed for blue ray (now everyone uses it, allowed games to be longer and better without multiple discs). Things are better for us now.
Nintendo pushed for gesture controlled gaming (led to the return of the PSEye and Kinect. Both which make the experience easier/better for most). Things are better for us now.
Competition is good for us. This is why MicroSonyTendo would be an awful idea, because there would be zero competition thus driving lack of innovation. Things would be bad for us.
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