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Competition is great, but it exists without the consoles selling similar amounts.

Even if both Nintendo and Microsoft went bankrupt, Sony still has to worry about other companies entering the video game market as well as smartphones and PC. Plus we don't have to talk theoretically. This "lack of competition" has happened before. The PS2 had a huge sales advantage over its competition and yet Sony wasn't free to start being lazy and coast on their prior success. When they did essentially try this with the PS3 launch, Microsoft swooped in and almost destroyed them.