The evolution of the console market over time

[The_Liquid_Laser]

EDIT:  I am modifying my original post here to provide a more logical version of the first post.

Generation	Arcade Games	Arcade Evolution	Balance	PC Evolution	PC Games
1	Magnavox Odyssey Atari Pong
2	Atari 2600  Intellivision
3	Atari 5200  Colecovision				C64
4	Atari 7800                  Master System	NES/Famicom
5	Genesis/Mega Drive Neo Geo            TG16/PCE	SNES/Super Famicom  Gameboy
6		Saturn	N64	PS1
7		Dreamcast                        GBA	Gamecube	PS2                 Xbox
8		Wii	DS	PS3           XBox360       PSP
9			Wii U        3DS	PS4           XB1         PSVita
10			Switch	PS5              X|S

For reference, I'll use the following terms.
1. Arcade Games: Consoles to play arcade games at home.
2. Arcade Evolution: Consoles to play games that have evolved from arcade gameplay.
3. Balance: Consoles that try to strike a balance between 2 and 4.
4. PC Evolution: Consoles that prioritize playing games which evolved from PC gameplay.
5. PC Games: Consoles to play PC games.

Also I define "Arcade" and "PC" based on what they primarily meant in the 20th century.
Arcade: Short, intense, easy to die, mainly challenges the body (e.g. coordination), uses a variety of controls especially joystick (or d-pad by extension), local multiplayer
PC: Long, slower paced, content heavy, focus on cutting edge graphics (including 3D graphics), challenges the mind (i.e. strategy, puzzle solving, etc...), uses primarily keyboard and/or mouse controls (or touchscreen and analogue stick by extension), online multiplayer

Generation 1-3: The focus of these consoles is to port arcade games onto a home system.

Generation 4:  Nintendo actually changes the nature of a home console, because of the Famicom Disk System (FDS).  If you look at the Japanese release dates of every game that came before The Legend of Zelda, you will actually see a bunch of pure arcade games (essentially the black box games).  The FDS introduces the ability to save data while still using the elementary Famicom controller which introduces a new type of game which has arcade controls, but is made for the home like The Legend of Zelda and Metroid.  Sega and Atari are still making systems primarily for arcade games.

Generation 5: Nintendo doubles down on combining arcade controls with content heavy games (e.g. Super Mario World, A Link to the Past, etc...).  In spite of this there are popular games that are both purely arcade games (e.g. Street Fighter 2) as well as PC Evolution games (e.g. Final Fantasy 6).  The Gameboy largely plays games like the NES and SNES.  The Neo Geo is quite obviously an arcade machine.  Sega is also still focused mostly on making arcade style games.  Some of these are pure arcade ports (e.g. Altered Beast, Golden Axe, etc...) while other games could have easily been put straight into the arcade (e.g. Sonic, Streets of Rage).

Generation 6:  All of the console makers move toward the PC side by moving heavily toward 3D graphics.  The PC was making 3D games for several years before this generation came along (e.g. Myst, Doom, Wing Commander, etc...).  Therefore PC game developers have a head start on first party developers when it comes to making 3D games.  Going forward game design ends up borrowing more and more from PC games out of necessity.  Nintendo and Sega only move somewhat toward the PC side, but still try to provide experiences that are somewhat arcade-like and Nintendo even sticks with cartridges.  Sony goes very strongly toward the PC side by adopting both a CD ROM and heavily encouraging 3D graphics from third party developers.  A lot of notable Playstation titles are either PC ports (e.g. Tomb Raider) or heavily inspired by PC style gameplay (e.g. Final Fantasy 7/8/9).  

Generation 7:  More of the same from the previous generation.  PC developers still have the advantage, so now games like GTA (a PC series) fully come into their own.  Nintendo is the sole maker of any significant handheld in this generation mostly because of their approach to hardware.  They go for cheaper/weaker hardware that does not drain batteries.  This philosophy paves the way for the GBA SP, which has a rechargeable battery.

Generation 8: Nintendo regained the top spot in the home market by bringing in a bunch of new customers instead of competing for Sony's customer base.  They also return more to their arcade roots with the Wii.  However, they get even further away from their arcade roots on the handheld side by including a touchscreen which simulates mouse controls.  Their approach to the DS also brings in a bunch of new customers.  They key to Nintendo's success in this generation was neither becoming more arcade-like or less arcade-like, but in offering experiences that would bring in new customers.  

Generation 9:  The Wii U and 3DS were both more complex and more expensive systems compared to their predecessors.  Consequently they both alienate a good chunk of their former fanbase. The Vita fairs even worse, and ends up killing Sony's handheld line.  PS4 gains a price advantage over XB1 early on and then later has a notable advantage in exclusives which guarantees it's commanding lead for the whole generation.

Generation 10: Sony and Microsoft continue to make consoles that are following the same philosophy of their predecessors.  Nintendo merges it's home and handheld lines into the Switch.  Every notable first party game on the Switch has a corresponding title on either the Wii U or 3DS (except RFA).  This shows that the main draw of the Switch is in it's hardware value.  In combining their home and handheld systems they took two low systems that many customers considered low value and made one very high value system.  In buying a Switch, a person essentially gets 2 systems (a home and a handheld) for the price of one.

In summary, the history of the console market shows that customers tend to buy the system that offers new experiences.  With the Famicom, Nintendo actually moved away from pure arcade gaming with the Famicom Disk System, and this move changed console gaming forever.  When 3D came along, success went to Playstation because it was the most PC-like system, and the best new experiences for most console gamers came from the PC or PC-like games.  When Nintendo made the DS and Wii, they were offering new experiences that gamers had never encountered before, and they greatly expanded the market (temporarily).  

However, since the DS and Wii, there has not been a system which came along to offer radically new software experiences.  Sony and Microsoft are following the same path they always have.  Nintendo, likewise, is largely making the same type of software that they have been making for decades.  The new experience with the Switch is on the hardware side.  Home console gamers can play their big budget games on the go if they like (e.g. BotW, Mario Odyssey, etc...).  At the same time handheld gamers are able to play games that are actually a new experience to them, since the Switch can play games much more sophisticated than the 3DS was capable of.  And of course, gamers who were already playing both home and handheld systems, get a very good value by buying one system instead of two.

The Switch is a different type of console than what has come before, because the innovation is purely on the hardware side and not really on the software side at all.  The Famicom, PS1, DS and Wii all innovated on the hardware side to offer different types of games.  The Switch is not offering different types of games.  It is offering better iterations of previous entries, much like the SNES did.  The lack of compelling new kinds of software indicates it will not appeal to non-gamers.  The value is entirely in the hardware, and therefore it is going to appeal to established gamers who understand that it is a better way to play the games they already enjoy.

Last edited by The_Liquid_Laser - on 08 April 2021