These days the freemium market is booming. why don't the console makers follow this trend yet? offer state of the art hardware at a loss to increase the userbase above the normal gaming community and have more users to sell their software to.

Could you see for example Nintendo drop the wii u price with 200 dollars, towards 50/99 euro to easily create sales of 15 million a year and upwards at a loss of 3 billion, would this be offset by the software increase?

In theory, the freemium model isn't bad, it's only in the execution.

For software, developers are giving away the core game for free, with their only income generated from additional features. Here presents a conflict of interest from developers: they need money, but providing too great an experience from the free portion of the game may reduce any incentive for users to spend any money on additional features. We can see the effect this has had on current freemium games, where gameplay is geared towards requiring additional features, be it lives or needed stat-boosts etc.

The issue with a freemium hardware model is the effect it may have on software, in order to generate the associated lost income. An ideal company would keep a traditional software model, simply incurring additional profit from the sheer volume of hardware that would sell at ridiculously below-cost prices, leading to greater market-share etc. Instead we have already seen online subscription fees and dashboards used as advertising billboards, what other money-making schemes will be thought of when hardware is sold at even lower-than-cost prices in a race to the bottom?

Another thing to consider is the effect this would have on competitors' strategies. Suppose Nintendo do go all in, with the expectation that developers would be lining at the door for a piece of their marketshare, could competitors see this as an opportunity to moneyhat third parties (incurring severe losses themselves) to keep them away?

Surprised this method hasn't come up in gaming yet. In TV (terrestial, cable and satelite) there are a number of options for you to watch TV. Pay one off, smaller fee for a box and watch a few channels for nothing or subscribe to a service and get more but with the subscriptions, usually the box (Sky/Tivo) comes with it for nothing.

Nintendo (and/or others) could do a similar setup, release a cheaper  digital only console, but it comes with a consistant subscription to use but the console itself is free.

Sadly, I don't think the price of hardware yet allows such a thing to happen but with Playstation Now Sony could do it with the Vita TV. Maybe.

Amazon.. just wait and see.. Amazon will do it

Loss leading the hardware is nothing new, standard for previous generations, but too higher risk these days.

O2 in the UK are now doing PS4 and XOne on phone contracts for those that are short up front, but would not recommend it.

so a loss lead strategy,.. the one every console basically already uses?

@xeno and kitler for sony and microsoft perhaps but even they tried to keep it at almost break even
I'm talking 200-300 below their cost margin

Sounds like the PS3 strategy which blead billions. 

I'm not actually in complete understanding of how it works, you might not either but how do the Dual Shock Controllers attached to the game/streamed content? In most cases the control of streamed content from say iPlayer or Netflix is the done by the controller for the device, so in most cases a TV remote. How would a DS3 be useable on a Internet TV?

The One went to far and offered only 1 option, DRM check in restriction and not something that appealed to many dedicated users. Maybe they should have done 2 options, the standard you have now and an digital only Xbone, with no drive but has all the other internet related features. Blu-Ray/DVD is the only loss that might have cost them their all important 'living room' appeal mind you but that is what the drive version is for.

Eitherway, I doubt a digital only video game console is near us any times soon but half way through this gen, I can see it happening as long as pricing in the shops are competative.

so ps3 specifically.   how do you feel that worked out for them,.. financially speaking?