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I think it's a great idea. I think that if Sony was to drop their unprofitable ventures and then Sony and Nintendo were to merge, they'd benefit each other greatly.

One problem though and something I don't like, is Nintendo is more about maximizing profits than anything. This really isn't good for the industry or the consumer, because rather than pushing the envelope, they cheap out when it comes to console design and some of their gaming budgets. If the merger did take place, someone in Sony would have to lead the company.