looking like psp imo

It's sales on PSP are doing nearly as well as they did on PS2 though.  Is it really smart to move to a smaller userbase with MUCH higher costs?

If anything I'd expect PS3 to get the OTHER Shin Megami Tensei spinoff.  The action RPG one where you can rely on less graphical assets.

It won't sell millions on any console.

PSP does make sense, but I'd still like to see it on PS3. I mean, Atlus does seem like it's trying to tread the HD ground recently by publishing Demon's Souls and 3D Dot Heroes. I personally think that re-releasing the Personas on PSP is to get people hyped for the Persona franchise. Besides, Atlus announced they were doing a SMT game for PS3 about what, five years ago? May as well be Persona 5!

Regardless of how awesome the game could be, its niche-ness won't call for huge development budget necessary to be on PS3/Xbox360.

I think it will appear on PSP, since it's more of a Playstation brand and PSP will not require as much budget.

I sometimes wonder how Sony would be faring right now in Japan without the PSP. It seems like it's the only thing keeping just about every Japanese third party and IP from switching to Nintendo.

I agree with you points in the OP, but I believe the DS will get the other spin-offs, along with the main series. DS already has Devil Survivor and Strange Journey, which may I add has over 300 demons animated. It seems like a waste to animate over 300 demons for one game.

I think it will be done on the PS3 first then port to the PSP. Persona were never groundbreaking in terms of graphic, so I don't see why it couldn't be easily done on the PS3. It favor of which console Persona 5 would be on : PS3

See now this statement makes me confused because it's like you're saying noone would ever make a niche game for the PS3/360 and yet I just got finished playing Resonance of Fate, played Demon's Souls before that, and can't wait for 3D Dot Game Heroes and Atelier Rorona. 

You may think that HD console games have to have huge budgets for developers to even think about trying it, but they don't.

OT: I despise doing these types of predictions myself where there's is little to no evidence one way or another (reminds me of KH3) so I will abstain.  Just thought I'd argue against the idea that Niche cannot exist on HD consoles.

ps3, you cant ignore hd gaming forever, look what happened to SE. they dont know how to develop for consoles anymore. NIER cough Last Remnant cough.