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Well I don't really think exclusives are the greatest ever created, but I don't think they're that bad. Exclusives give developers the chance to fully use a systems capabilities, so that's a good thing. For instance, right now some (potentially) good Wii games are being held back by the fact that they're being made for the PS2 and then ported to the Wii with tacked on motion controls.

Also having only one dominate console in the industry (which would receive the most exclusives), helps because developers can focus all their efforts into one console and really push it to it's limits. It's sort of like how it's good that there is only one video format, the DVD, and now blu-ray. Yeah, the prices might not come down as fast, but adoption rates will probably pick up as well, meaning that more people will support that format, which will drive sales of that format, until it overtakes the previous standard format.

And consoles are always going to have exclusives, since hardware makers usually own a few developers. To ask them to either stop buying developers (and ridding themselves of the ones they own) would hurt their profits, especially non-Nintendo companies who rely heavily on software sales (though they'll still get royalty fees and such). Or you could have only one console, but that would eliminate innovation without competition. And don't be confused, there is competition. It's just that it only lasts a few years at the start of every generation. That's where exclusives come in. So there's competition to make sure you're the best at the start, so that you'll be the best at the end. It's a pretty good system. Innovation is present, but there's still a monopoly of sorts, and one that can switch hands relatively easily (as we've seen with the PS1 and now Wii).

So in a way they're bad, but for the most part I think they help the industry reach the highest it can go in terms of users in the market and profits.