As others have mentioned the problem with the PS3 and Xbox 360 is that they're too expensive for casual gamers. Even if they did have the games it would likely still be a hard sell until they come down to a mass market price (likely $199 or maybe $249 with a pack-in game like Nintendo did). The only problem is that neither one has so far come up with a casual game that has the buzz of Wii Sports and Wii Fit. It's going to take an amazing amount of creativity for them to challenge Nintendo after coming from this far behind.
What I would do if I were them... Devote resources to making games that appeal to young children (even though Nintendo truly dominates in that area) like Banjo Kazooie 3, but also extremely creative stuff like perhaps interactive lego kits or a wand plug-in controller for a big budget Harry Potter game, educational sesame street/elmo games (I know my ideas aren't exactly great but I'm sure a lot of creative people getting paid a lof of money would come up with stuff) and keep working on driving down the price of their systems.
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