Last Gen was the biggest in terms of console sales, 260 million from the previous 190 million of the prior generation.

And yet many people claim that their favorite generations were the earlier 3,4, or 5th generations.

Sure, many more people became gamers and gaming as a hobby became a lot more mainstream and acceptable.

Furthermore, Gaming garnered a greater focus and budgets skyrocketed, but is this really such a good thing?

With a growing market and more money being pumped into the industry, we have more risk on developers, and instead of these larger budgets giving us more innovation, diversity is actually decreasing. Games are being designed to appeal to as many people as possible rather than making as good an experience for those who actually like the genre, and gaming is stagnating as a whole.

Perhaps a downsizing and a refocus is actually what we need.

Larger market size is always better, the problems were tied to the increased cost of game making which makes it more difficult to take risks (which is partly due to the fact that publishers stopped caring about the AA market to chase COD-like success...). A smaller market doesn't mean anything will improve for consumers, it just means things will get more difficult for producers

Yes it's bad. Less games, less risk, less support.

It depends on how it grows. The 7th gen saw a boom of shooters and party games, so much that those genres now suffer a severe burnout (not in terms of sales, but popular opinion). If the rest of genres had grown in the same proportion, we wouldn't have any problems withthe growth of the market.

Smaller market size means that focus consumers increases, and a larger market size doesn't necessarily mean more money. 1 million sales for a 60$ game is just as good as 60million sales for a 1$ game.

One of my favorite quotes was on another forum:

"While From Software was popping Champagne about Dark Soul's selling 2 million, Square Enix was crying about Tomb Raider selling 10 million"

For Nintendo yes

Yes its bad. I don't want fewer games.
But I somewhat I agree. Developers are spending too much money and are just making the same types of games which is boring.

More important to have more userbase with similar tastes/requirements to you than a bigger market overall.

Could be 7bn gamers, if 6.99bn of the only buy and play games you have no interest in, they might as well not exist.

I didn't think size mattered

It does need to shrink a bit.