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Mummelmann said:

It could be because the handheld market is set to have about 40% or so of the previous generation's hardware sales and that there were/are three contenders nudging the 85-100 million goal post in home consoles in the 7th gen whereas the 8th is set to have one sell about 20 million and another possibly 60-70 and with the leader slowing down quickly at present.
The Japanese home console market is collapsing and the smartphone/tablet/social/browser tsunami has washed everything else away there.

It's clear as day that we're facing a major contraction, unless OP is suggesting that we will somehow see another generation of 530-540 million or so total consoles sold with a crawling Vita and Wii U, an xbox that isn't setting the charts ablaze, a 3DS that is set crash early and fall short of 50% of its predecessor's sales and a PS4 that is slowing down to a pace far below the Wii.
Even if the One and PS4 sold 150 million each, that would still leave the total console market far short of the required numbers to prevent a contraction.
Heck; even if the Wii U, One and PS4, all three of them, sold 150 million units each; the 530-540 million mark could prove somewhat elusive.

OP: people are saying that it's shrinking because it is shrinking. It's not a huge mystery.

Look, no-one has EVER suggested that the growth won't slow down. The planet is only so big.

But you are saying that it's SHRINKING. There's no proof for that. Whatsoever.