Well, technically we could call generation 4.5 the worst, the "oddball generation" (Sega CD, 32X, Philips CD-i, Virtualboy...). No company was saved from financial disaster (Sega) or everlasting shame (Nintendo, Philips...).
But seriously, in my opinion the thing that has damaged this gen the most is the lack of backwards compatibility. And that's weird, because the 7th gen had that problems with that too (360 had no bc, only a couple of models of PS3 had bc, and the same for the DS...). The lack of backwards compatibility allowed companies to remake games with little cost, very fast developement periods and they could keep the price of the PS360 edition as new because it is new again. It just makes too much sense. Is it good for the companies? Yes. Is it bad for gamers? If those remasters are made to games barely two or three years old, yes. People say that it's just another option, and you don't have to buy them, and they're right. But allowing to play last-gen games on your current gen system would be giving even more options.
If you add that to the mindset and business practises of most publishers, the rise of mobile and its effect on handhelds and home consoles, the higher costs of game developement, the condition of most japanese publishers (Capcom is still in finantial problems, Konami is losing its most important developer, Sega is borderline bankrupt, Nintendo can't sell as many consoles as it wants, Sony has to take care of every other sector of its business...), the quick evolution of PC gaming that keeps leaving consoles behind on the specs aspect... It's no wonder most companies are just playing it safe and not releasing incredibly risky things.
I still defend that the PS3 and 360 could have lasted until 2017-2018. They may not be able to reach PC power, but I doubt that most games released on PS4-XBone couldn't work almost identical on last gen.
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