I'm going to compare consoles to cars. It might not be the ideal comparison, but I think it is valid here in Southern California.
I'm going to go out on a limb and say that people like their cars to do more than just take them from A to B. Sure, you don't need power windows/locks, automatic transmission, air-conditioning, abs breaks, radio, stability control, airbags, etc., but over the years, the increase in automotive manufacturing cost is partly do to implanted standards that gives your ride a few more gadgets (not to mention the R&D that went to implimenting them correctly). You may not like paying for more, but I'm sure you hold some expectations on what you want your car to do for you. I can bet you that your expectations are higher than a person of your age 10 years ago, or even 20 to 30 years ago.
Some of you may think that consoles should only play video games, while others cannot play video games if they can't play with other people. Would any of you remove the multi-player aspect of your games. Would any Xbox 360 owner here be willing to give up on their Xbox live multi-player experience now that you have experienced it? How about the Trophies/MS points, or digital downloads, Would any of you be indifferent if they stopped offering them?
In order for an idea to continue being popular, it must adapt to the changing times & different demographics. (like religion) Consoles need to follow this path. They can't just satisfy the hard core base because it's a finite source of income. They need to appeal to as many people as possible in order to not run the risk of becoming obselite by merging technologies & unforeseen competition.
I wanted my PS3 to do everything, but in my opinion it still lacking in the internet/streaming video/streaming music department. I will add that they fixed the Youtube app recently. That brought a smile to my face.