How time flies. Back then everyone was watching Sony and Microsoft and Kutaragi actually thought the Playstation would become the center of the living room. That's why Microsoft was afraid: What if people played games, watched movies, listened to music on their Playstation instead of a PC? I don't think anyone outside of Kutaragi really thought the Playstation could replace computers (how would that work? Adobe Photoshop with a Dualshock?)
What has been proven time and again in this industry is that the market is here for the games. While Sony had lofty ambitions with Blu-Ray, Microsoft focused more on the games and gained marketshare. Nintendo focused even more on the games and disrupted the market with the Wii. "Gaming journalists" swallowed the Kool-Aid and were simply repeating what Sony and Microsoft told them and said Nintendo's success was a mystery, even though Nintendo talked non-stop about disruption and blue oceans.
And the story always repeats itself: The PSP also focused on multimedia (UMD, music, videos) and lost to the DS. This generation, Microsoft was talking so much about the Xbox One as an entertainment hub, while Sony focused on the games - and won. Nintendo was interested in 3D with the 3DS and "asymmetric gameplay" with the Wii U - and both consoles failed, at least initially (I mean... the lastest 3DS iteration is the 2DS XL). Now they are talking about the games again with the Switch and - surprise - the console is a hit.
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