Basically I agree with you. The 360 in particular would be really feeling the squeeze and might even force MS out of the console business - or, they'll buy out EA.
Sony would lose some sales but remain viable. But a major 4th competitor might scuttle any chance of the PS3 ever achieving a net profit.
Nintendo has never relied on 3rd parties and while this will affect them too, it'll actually help them remain dominate this generation.
You bring up a good point about Japan. EA is weak in Japan and they know it. Maybe EA would seek to buy-out or partner with a major Japanese studio? Sega? Capcom? Konami?
As for Europe, I'd except them to buy-out Ubisoft too and that'd help Europe sales.