So what happens when consoles really start getting into digital distribution for full games? Or OnLive takes off? Will PC digital keep going up or drop off?

Lol maybe nvidia recently dropped out as a gpu manufacturer for consoles and are pissed ? Maybe they are basing this on the current trends without counting the next gen in.

This. They ripped off MS once, and despite being able to periodically switch with AMD at GPU leadership, they are less competitive in the mid-range, where console manufacturers pick their models, so next gen Sony too will probably choose AMD. So, while it's true that PC is the single biggest platform and that it will be able to reach again a market as big as all consoles put together, predicting consoles dropping despite a growing trend is just sour grapes. I'm very happy about PC gaming performance, but no need to be bitter against consoles, nor to wish their decline.

This said, a real terrific PC growth, far bigger than NVidia predictions, could happen if Android were to dethrone Windows as its leader OS, unifying PC market with a large share of tablet and smartphone markets.

Even tough Im certain that Google will win the mobile OS race, Im not that sure that their Chrome OS will take off. Its performance right now is slugish at best.

OT: yeah, the graph is waaaaay of IMO, at least when it comes to predicting console software revenue. On what is the decline based on? The fact that PS360 new game sales are down a bit? What will happen if the WiiU and PS4/Nextbox will expand the market even more? This looks like data taken from the ass IMO.

About Android, yes, I should have written that IF very BIG!  (BTW I'd see more feasible, on PCs, an Android environment running on top of an easy linux distro, like Ubuntu).

About NVidia graph, I could see in it just a very partial and small truth: there could be a small flection at the generation change, when old gen will decline but new gen could start not strong enough to offset it, and it could affect more HW sales than SW ones.

But I thought services like Onlive where going to eat into both PC and console sales...

Indeed, using 3.75 data points to predict the next 4.25 data points is kind of dodgy.

Internet infrastructure is about 10 years away from that being ready for OnLive to take center stage but in 2020 streaming will probably displace consoles as it will offer all advantages that most people claim for consoles (hassle free, no need to buy hardware upgrades etc) plus the PC advantage of the latest graphics. The possibility of internet outages will keep some local gaming alive tho.