I think consoles will continue to grow as MS and Sony get better at incorporating non-gaming features into their boxes (thereby drawing in the more casual crowd) and as Nintendo again takes their ball and creates their own game off in the corner.

I expect the exact opposite from handhelds. Some from market interference from other gaming sources and some from the lack of a killer casual app (though, given the phone/tablet market, the two are kind of linked... the casual "killer app" of last generation, Brain Training, would probably see light of day on a phone/tablet for $5 in today's market, not on a dedicated handheld).

See, I think your points are linked. Say someone does create a modern day Brain Training. If you were the developer, where would you port the game? To iOS/Android with hundreds of millions of users, low development costs, no licensing fees, no cartridge fees, etc... or would you put it on the 3DS or PSV with their higher developer cost, high license fees, and cartridge fees? Even the marketing costs for an iOS game should be far less than a physical retail cartridge.

The benefits are higher on the 3DS/PSV but when Brain Training was created, I highly doubt the developers predicted it would sell millions and millions of copies. In today's market, nine times out of ten that developer will take the safe, cheap road and put that thing on mobile devices.

I'd change last one to PSV < PSP.

I expect it to have bigger market share than PSP did but actual sales will be lower due to smartphones eating casual market.

depends ... are you going to the awkward stance of the gaming market is shrinking because you insist on turning your back on the fact that smartphones and tablets are being used for gaming?

it's a bit like trying to claim less people are reading because book stores are having trouble staying in business while insisting that e-readers such as kindle don't count.

First off, the gaming industry as a whole won't be shrinking; all signs point to its continued expansion.

If the question is whether the market for dedicated gaming platforms is shrinking, specifically game consoles and game handhelds, that's an entirely different situation. Lots of variables to consider here.

There's no question that games on iOS and Android will continue to gain marketshare, even if it's primarily within the expanded audience which will come to include anyone who owns a tablet or smartphone with any games installed on it.

Maybe the real question there is how reliable this new expanded audience will be when it comes to generating growth revenue through $.99 app purchases.

Going back to dedicated gaming platforms, I believe pricing may come a long way in determining how quickly each new system gains traction, second only to platform specific games within the first year of release. So these platform specific exclusives may well be the real console sellers more than ever before as general consumers continue to gain more options on which device/platform to game (web browser based, cloud based services, PC, iOS/Android, etc.).

The market has grown pretty much every single generation, and I see no reason why it would stop doing so now. The crash of 2008 didn't stop people from buying games, and so I don't see any event in the future that would stop people from buying games.

The cost of games has been steady for quite a while and doesn't show any signs of increasing.

I don't see anything replacing video games, since nothing has replaced film, music or literature (well, maybe literature, but that's too much effort for many people.)

And, since the market isn't shrinking, nobody is going to drop out.

Stop being apocalyptic. Gaming isn't going anywhere, and next gen will almost certainly be bigger than this one.

B-B-But no one is going to want to play Mario Kart/Halo/Call of Duty when they can play Angry Birds on their phone!

Indeed. I don't think I've ever met anyone who can play Angry Birds for more than 20 minutes at a stretch.

Of course, the only people making such ludicrous claims are the people who work for Zynga, who hope to such an extent that it will happen, that I think they've managed to convince themselves.

For want of a proper control system, enough battery life, and enough processing power, hardcore (by which I mean, non-casual) phone gaming is never going to take off. There's nothing wrong with casual phone gaming - I enjoy it myself as a brief distraction - but it is no substitute for a properly fleshed out PC/console/even handheld gaming experience.

I hope it's smaller, I can't imagine even bigger launch consoles then the ps3 fat and the original 360 with the huge power brick.

Handhelds have been around longer then actual consoles, they're never going to replace them. It is simply a different experience, holding a screen in your hand or playing on a big screen with proper sound.

Dedicated gaming handheld market will probably shrink, handheld games will grow as will console sales.