You know, dsoverpsp, that scenario sounds familiar... When did something like that happen? Oh yeah, 1983. Coleco, Mattel, and Atari were all basically the same thing, as were their dozen other competitors. Any game you could find on 2600, you could also find on Colecovision or Intellivision (and could play the 2600 version on any of the 3 consoles). Developers had no real incentive to produce quality or differentiated titles. Plus, everybody and their grandma was getting into game development; even Quaker Oats had a games division made for releasing video games.
Know what else happened in 1983? The American video game crash, which sent the entire TV game system market into a 2-year slump. A slump that was only broken when a Japanese video game system which had liscensing requirements that prevented anybody from making the same mistakes of the early 1980s on this new system was released by Nintendo.
Forget the prospect of the Wii causing another video game crash; the 360 and PS3 are far stronger canidates for that with their massive shared library. But no worries, we almost definitely won't see a second crash of the market...
Sky Render - Sanity is for the weak.
