This is a big reason why I don't think consoles are holding back anything with regards to graphics in games. The vast majority of gamers, either PC Master Race or console peasants (like myself) don't play games at the highest fidelity setting.
Look at Crysis and how far ahead it was of its time it was. It barely made it's money back after selling a few million copies, because most people couldn't run the game. Hence why the sequels were streamlined to be playable on (and portable to) less capable machines.
If anything, consoles were ahead earlier on and gave PC gaming a foothold to become popular. Yeah, everything is better on PC now (unless the developer is lazy and doesn't take advantage of the system), but most don't developers don't want to take full advantage of that power not because consoles are holding stuff back, but because there isn't a big enough market.
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