Here ist why:
Our technology is already on a very high level. Video games will stop looking significant better and better in the future. You can already just see small differences between ps3 and ps4 and there was even a 7! years gap between both. The differences between ps4 and ps5 will be even smaller.
We already good 3d models, realistic looking animations, realistic looking faces, realistic light effects, realistic shadows and more. It wont get much better.
The gaps between previous generation were huge. Introduction of 3d graphics (SNES to n64), Introduction of HD graphics (ps2 to ps3) and more. 4k and more is not significant better enough to grap consumer attention. 4k tvs still dont sell as great and 4k content doesnt either. The average consumer isnt really interested in 4k, 1080p is enough.
Also great graphics in video games need really high budgets. The sales of video games didnt increased much in the past years, the production costs do however. As prettier a game is, as more expensive it will be. We will soon reach a point were it wont be profitable anymore to reach better graphics.
Our mobile phones are already capable of deliviering ps3-like graphics. In just some more years, we will see ps4 graphics.
Smart Tv will be able to handle ps4 graphics. That will be enough for the average consumer.
Sony and Microsoft both live from third party developers. The most sucessfull games on playstation and xbox are GTA, COD, Assassins Creed, Fifa, Elder Scrolls and co.
When all those games will be available on smart tvs, smartphones and low budget pcs with "ps4-like graphics"; many consumer wont buy an Xbox or playstation anymore.
Sonys and Microsofts IPs are great, but not that popular. Sure we got TLOU, Halo, Uncharted but thats pretty much it in terms of very popular franchises. Not enough to move consoles in my opinion.
Nintendo on the other hand still have mario (most sucessfull video game character), Mario Kart, Pokemon, Zelda, Smash. Pokemon alone sold millions of Gameboys. As long those titles wont be available on smart tvs, mobile and co (and i doubt nintendo will make full games available there); these are still great reasons to get a nintendo system.
At the moment hardware power is a big selling point. I say it wont be important in the future anymore. Then only games will count. Nintendo will win here. Third Partys wont care about Sony and Microsoft, they will try to reach as many consumers as possible and move to smartphones, smart tvs, "apple tvs" and co as soon these will be strong enough.
Sony and Microsoft dont have enough to offer aside from raw hardware power. Nintendo can sell more consoles even with inferior hardware (gameboy, DS, Wii). As smaller the gap in terms of hardware power will get, as more this will help nintendo and weak the competition.
graphics comparison snes, n64, ps3, ps4, iphone: http://gamrconnect.vgchartz.com/post.php?id=7744310
Actual mobile games capabilities: https://www.youtube.com/watch?v=2mzCGX2q3Z4 (Keep in mind those games also need to run on older/inferior hardware and the budget on those games are still very small. A iPhone 6s or galaxy s6 exclusive game (uses all the power and wont run in inferior devices) with high development budget could do even more.
This game (cryiss 3) run nativly on the nvidia shield. Its an android tv box, using a ARM CPU similar to whats used in smartphones. And already almost 1 year old. The actual a9x chip used in the ipad pro is even faster. Those chips arnt extremly expensive and are very powerfull already know. They improve heavily every year (around double performance every year). In just 2-3 more years, we will have very, very advanced mobile technology if this rate continue.
And finally this is an iphone 4 back in 2010 at its full potential:
And iphone 6s (~50x as strong as an iphone 4) will do much, much better.
also see this: http://gamrconnect.vgchartz.com/thread.php?id=213819&page=1#8
