Two competitors works ... three is overkill and usually ends with one of the companies being forced out of the business (see: Sega).
I think you're mistaking hardware competetion and software competetion as the same thing too, those are different things (ie: EA buying the NFL license).
Nintendo I think is a worse company today than they were in the 1990s, mainly because Microsoft has moved into the game business and over-saturated the market for a core gaming console. In the late 90s/early 2000s Nintendo was a company that would give a more balanced portfolio of games like GoldenEye, Perfect Dark, NBA Courtside, Wave Race, Conker's BFD, Killer Instinct, Eternal Darkness, 1080 Snowboarding, etc. to go with Mario and co ... but today they've abandoned that.
And really for what? MS doesn't need the game industry, they don't need the meager profits it generates, they're the rich guy at school who could have any girl he wants but purposely goes out of his way to take your girlfriend, lol.
