Its also because devs target consoles, and scale up for PCs, you will start to see a big bump in visual quality in the next few years now there not having to cater for 7-8 year old tech anymore. This has been the main cause of your diminishing returns. 

It's also impossible for consoles to get: Free online and $10-$20 off on every single game at retail. ;) Which over a consoles entire life makes the PC cheaper if you buy allot of games.
If you only stick to Steam sales... My god, you're laughing!

Hay im not knocking PC gaming i do it myself, im saying asking some people to outlay £1000 day 1 is just to much of an ask, yeah steam has awsome sales but it also has shit day 1 prices, at least here in the UK. 

I do hope over the next year with the next gen here everyone can get there shit together with digital pricing on new titles, its criminal. 

Who says you have to lay down $1,000 day 1?
PC's are upgradeable, you can buy a moderatly fast system for a fraction of that and over time upgrade it.
Upgrading a PC isn't difficult either, even a monkey can do it:
http://www.youtube.com/watch?v=1DPQW0e9ufM

I know but i thought we were talking about getting a PC thats going to outclass PS4 here, and your going to have to go quite a bit higher on spec, cos PCs dont get as close to the metal as consoles, Lets face it you would not see GTA5 running on a PC with a 256MB graphics card. 

And this PS4 has the equivalent of a 3-4GB graphics card if the devs want.  

Im not really wanting to get into a big debate about it all, im just saying console gaming is more affordable, yes you might be able to make PC gaming cheaper overall, but the initial outlays are high, and you can make console gaming as cheap as you want, you can get most games for £5-10 only a year after release, and you can borrow games off your mates, rent games from rental places. 

Of course you could argue that you could just go full pirate on PC but as a game dev i would never condone that. 

Nvidia is absolutely correct. That is why I am skeptical about Sony and MS claims that we will be "blown away" by PS4 and XBOne graphical capabilities - their graphical capabilities have already been there for years in PC form. There is nothing new there.

For me, a console should be about a unique gaming experience. I can see how Kinect may contribute to that, but the PS4 looks to me just like an average spec PC connected to a TV.

Problem is there is practically no super high end graphical games that are PC only, which means PC versions of high end games were being heavily gimped by assets needing to be scaled to 7-8 year old tech. 

Lucky for us graphics isn't everything

Don't think graphics is even in my top 5 when it comes to games

Of course they are correct. But to me PC is no competitor to consoles. Too different worlds.

Funny. I don't recall the Xbox 360 and Playstation 3 running with only 256Mb of Ram. :P
Plus, it's not a fair comparison either way, 99.9999999% of multi-platform games have better graphics right out of the box anyway, which is going to make it more demanding on the hardware.

As for Ram and graphics, I have in total 9Gb of GDDR5 Ram in my PC (Albeit, only 3Gb is actually used for games, but I can use that entire 9Gb for compute.)
However, from there developers are free to use my 32Gb of System ram however they want. :P Not that it will happen anytime soon.

Steam games can often go lower than £5 when a sale occurs, or when a good Humble bundle like the EA humble bundle that occured not long ago where you could have gotten: Dead Space 3, Dead Space, Mirrors Edge, Crysis 2, Medal of Honor, Battlefield 3, Burnout paradise, The Sims 3, Red Alert 3 and Populous for a mere $5 USD, try doing that on a console.

As for borrowing games from friends, Steam allows it.

Well, that's easily debatable, take Battlefield 3 for instance, it's less than half the game on console with horrible image quality, much smaller maps and half the population in a Multi-player game.

Star Citizen looks downright amazing, which is PC exclusive.