As traditional gaming consoles they probably already shrunk in the 7th Gen.
I know several people who bought a PS3 just to watch BluRays as an example. Hell Sony Australia even game away free PS3s as BluRay players if you purchased their LCD or PLASMA TVs.
Now look at 8th gen, handhelds are WAY down compared to last. Mobiles have eaten away at them. PSP in my opinion only did so well cause it had additional functionality (music, movies etc..) that the DS didn't. Now that smart phones can do all that people don't really need a VITA.
As for consoles I can only see them growing because of their multimedia functions connected to a TV.
On a side note, look at all the limited edition consoles that have come out last gen and this gen so far. Lots of dedicated gamers will buy these "limited edition" consoles so the numbers are already inflated of actual gamers. Case in point is 3DS, they had at least 6-8 limited edition systems. I know I bought several of them as collectibles lol I also know others who done the same.
