Nintendo is doing the right thing with the Wii U. The console market is already being written off as dead due to tablets, smartphones cheaper laptops, etc. Most of these features $0.99-$4.99 games or are using games like Minecraft with endless mods and servers for less than the cost of one console game for hours of entertainment.
Notice also that something like Minecraft doesn't need some publisher dropping $100 million on graphical artists spending three years to make it look good enough to earn $60.
Nintendo and all console makers are going to be walking a thin line. They have hit the point of diminishing returns and there aren't enough people playing games in a hardcore enough manner to justify the outlandish costs the industry needs to produce the next big thing.
Most studies are showing that consoles spend as much or more time streaming video than they do playing games.
If someone thinks the winner of the next console war is going to be someone who can get a bunch of people to cough up $500 for a new super spec console so they can buy $100 hobbies, not games, hobbies, then they are nuts. I say this because people are already complaining that games like Call of Duty don't ever add much new content. They just roll out a few new additions and rehash for $60. Increasingly they want $100 just to get the downloadable content that should have been included in the first place and to get access to tools to manage your "clan" and stats.
That isn't playing a videogame. That is having no life making your hobby playing just one game.
That isn't the direction of the industry. The industry is watching people make much more money and a better return on investment for things like Angry Birds. Even if Call of Duty sells half a billion, if it cost $100 million to make it is too big and too risky to do anything different and so they will be doing more of the same. Now you are going to add a new generation console which demands even more artists, programmers, time and resources to try to get an even better looking game? What are you going to do, risk $200 million in hopes of making a billion in sales? How many companies can place those bets and what sort of real changes or risks are they going to take with so much on the line?
Wii U has a ton going for it in that it can play games with up to five people. It has browsing and social intergration. It fits right in to families that are unplugging from cable and subscribing to Hulu+, Netflix, Amazon Prime and or just watching YouTube. It has built in lower cost gaming and libraries via downloads and being compatible with the Wii library.
There is no way the next generation can bare another round of price increases in videogames. There isn't a chance in the world anyone can take what they did 6 years ago, quadruple the power, add $10-20 to the retail price of the games and just repeat for another generation. They are competing with streaming, browsing, smartphones and tables all at lower price points.
Think about television. When the eyeballs started dividing up between videogames and internet, could they double-down and start making ever more ridiculous and extravagant television shows? No they went with reality television to fill the gap because it was cheaper. Videogames are going to have to get cheaper and likely downloadable rather than resellable. Others have mentioned that if they can' resell it, then they won't want to spend even $60 and that reasoning is sound. So again the price point will be coming down not up.
You look at most 5-6 year olds and you don't see them holding consoles. You see them holding Mom or Dad's tablet and playing free to $5 games on them. That is what Nintendo is competing against and the Wii does a pretty good job of keeping those eyeballs around. This generation for Xbox and PS3 has already gone longer because there were less profits for hardware. Are they supposed to double down again on that and try to get the profits back 10-12 years from now for the next round?
