Going into this next console cycle, I think both of those companies could be in for trouble. Sony is hurting big time right now, Nintendo has lost a lot of the momenteum they had about 4 years ago now. Both have been stung by the rise of the cell phone/tablet market (gaming divisions anyway) and having to burden an uncertain yen/dollar.

Microsoft could really put the hurt on both now that they're entrenched in both the core and casual (Kinect) crowd. And there's the ever present threat of Apple possibly making a move too. 

What I propose --

A *partnership* between the two Japanese game giants, Sony and Nintendo. As equals. No buy-outs or anything extreme like that. They split licensing fee revenue down the middle, like a corsortium (something Sony is familiar with ala the Blu-Ray disc format). Hardware is co-financed, so is marketing. Hardware is co-developed, which shouldn't be too hard since Sony/Nintendo in a lot ways seem to think the same way (see: Wiimote -- Move -- N64 stick -- Dual Shock -- GCN pad, etc.). Both companies have their logo on the box. 

One console platform. One central future cell phone/tablet future gaming platform. Sony brings their high tech and network expertise to the table, merged with Nintendo's broad appeal and outside-the-box thinking. Super Mario, Uncharted, Zelda, God Of War, Pokemon, LittleBigPlanet, Donkey Kong Country, Gran Turismo, Wii/Mii Stuff, The Last Of Us, etc. on one central platform, with Monster Hunter and Dragon Quest and Final Fantasy as well and all Western third parties.

They compliment each other well, because each is strong where the other is weak. 

Competetion is still there, as long as you have Microsoft on the other side of the fence, consumers still have all the benefits of price drops and what not. 

They don't think the same way, Sony copied both of those examples from Nintendo. I don't think a partnership between them would work, because Sony wants to make an expensive overpowered console, and Nintendo wants to make a cheaper, reasonably powered console.

Move was in development back in 2004, there was a video showing a prototype on the PS2.

ot: I don't think this is a good idea, both companies have attitudes towards gaming that are far too different. Microsoft and Sony however... that could work imo. But it's all still wet dreams so I'll discuss it no further. 

edit: I guess I am discussing it further...

The Playstation 3 was overpriced for the market, but the rest of Sony's game machines have been reasonably priced. It's not that Nintendo doesn't like high tech (Iwata has said this), they just don't like taking the risk. 

A partnership like this would considerably lower the risk to both companies since they can split hardware investment and any hardware losses down the middle. 

lol no
that would be disastrous for Nintendo economically speaking...

That they think differently is precisely why it's a good idea. No point in merging if the other company isn't going to strengthen you in areas you are weak in. 

If you really look at where Sony is weak ... that's where Nintendo is strongest. If you look at where Nintendo is weakest, that tends to be where Sony is strongest. 

They compliment each other quite well. Nintendo could really use edgier IP like God Of War and Uncharted, Sony badly needs to appeal to a wider audience and there's no one better at that demographic wise than Mario and company. Together they would build a platform that could sell well over 150 million units (the PS2 record) IMO and then the profits would be immense to share in. 

I'd love it, but Sony doesn't want more loss-making divisions, I think :x

But a miracle for Sony lol

+ i dont see any trouble for Nintendo in the near future....

If current Sony was the same as the Sony from the PS1/PS2 era then this would be a good idea. I was hoping that after they messed up with the PS3 they would go back to making great affordable consoles, but after making the same mistake with the Vita, and saying at E3 that they've "never been first, never been cheapest, but have always been the best" I doubt they are going to change their ways.