That's because Sony makes basically the modern NES. The Playstation is really nothing but the natural evolution of the NES concept just taken into account the natural growth of demographics (ie: people who were kids with the NES were going to want to keep playing as they got older). 

You may be happy with limited choice, but most people are not, if everyone was like you Nintendo wouldn't have any issues, but that isn't how things work. The "savings" Nintendo provides are rather immaterial too, if I'm buying a product I intend to use for 5 years+, then saving $50 or even $100 works out to a whopping $1.67 savings per month over 5 years (at $100 less). Once people are invested in the idea of getting a console you may as get the one that gives you the best variety of games. 

Yep, hence why everybody wants them to switch to an a la carte setup where u can pick and choose the channels u want instead of paying for 100+ channels that u don't watch.

What erosion?

100 mill (PS1), 150 mill (PS2), 85-90 million (PS3 projected), 100-150 mill (PS4 projected finish)

Seems to me Sony is far and away the most consistent and steady hardware manufacturer the business has seen, far moreso than "first party giants" Nintendo and Sega. You're letting your bias against them get in the way of giving them deserved credit, they simply took Nintendo's formula behind the NES and SNES and then watched Nintendo self-implode onto itself by voluntarily accepting a niche position. 

I would agree casuals are an untapped audience if we were speaking in 2006. Problem is we're not in 2006. We're in 2016. And contrary to what you think this is a huge difference. 

Casual demographics are NOT underserved. If anything they are the most overserved segment of the industry today. There are more games made for casuals today than any other demographic. There is even more marketing to this audience than any other ... I see more game app commercials than Nintendo + Sony + XBox combined these days, seen that Arnold Schwarzenneger apps commercial like 50 times it feels like this past month alone. "Download for free on the App Store" IS the biggest slogan in the game business today.

This notion that casuals are in need of rescusing from Sony and MS' brutish hard-to-use shooter boxes and Nintendo (and *only* Nintendo) can be the white knight that finally gives them games they can understand and play is incredibly out of touch from the reality. These people have hundreds of different games being throw in their face for free. 

Nobody has to sit and play for hours on end, I refuse to believe that the market of millions upon millions of people who enjoyed sitting down and playing light hearted, simple games together as a family or group of friends just vanished.

In either case that isn't the model Nintendo offers. Nintendo offers just a few kinds of content. "Ala carte" implies choice, Nintendo doesn't offer chioce, no one wants that if it means no sports (where's Madden? where's FIFA? where's NBA 2K?), or the mainstream shows/programs of the day (like it or not ... GTA, COD, Destiny, etc. etc. Can I choose any of these on Wii U? 3DS?). 

People don't just buy a platform for *themselves* either, what happens when you have 2-4 friends over? How many grown 25-35 years olds are happy playing just Mario Kart? What if I'm not a console warrior robot and happen to like different games, like maybe I do like Mario Kart, but maybe I also like GTA and COD and some Madden too? Then the position I'm put in is I either buy two systems (which a lot of people don't want to do). 

The proposition that Nintendo offers of an extremely limited library largely revolving around the same 4-5 mascot properties is more like having a cable service that charges you 75% of everyone else but only gives you access to Nickeldeon, Disney, and maybe ABC Family if you're lucky and nothing else. 

I directly responded to your point that casual demographics are somehow underserved. They're not. And you know it. There is no underserved gaming audience sincerely except maybe sex gaming, and we know Nintendo will never go there, but someone is likely going to make a lot of money from that at some point. 

If Nintendo is obsessed with finding the next blue ocean ... well there it is. No one said it had be a kid friendly blue ocean. 

They didn't vanish. As a matter of fact they probably play more today than ever before, because of a very convienant, free option they have today. 

The problem that you have with this is it's not Nintendo playing white knight rescuing these people. They don't need rescuing, Apple and Google already beat Nintendo to the punch. 

Nintendo honestly blew it with this audience. They haven't a true new mass-market break out casual hit game since when? Wii Fit in 2008? This is eight years ago now. Wii Music was a dud and so was Nintendo Land, neither or these became big hits, and Wii Fit and Sports basically fizzled out by the time the Wii U rolled around. 

Some of these kids playing smartphone games today weren't even born when Wii Fit came out. Nintendo has done dick all since then, several huge casual/family gaming phenomenons have been birthed since then -- Angry Birds, Clash of Clans, Words With Friends, Plants VS. Zombies, Candy Crush, etc. etc. it's just none of these are made by Nintendo. Also do you notice something here? All/most of the smartphone blockbusters ARE light-hearted, fun, often times cartoony games. The smartphone market is dominated by cartoony/friendly looking games, not realistic graphic type hits. 

There's been more new original IP of the casual/friendly nature birthed in the last 5 years than maybe in any point in gaming history. I take it the rub then really is the sour grapes that it's not Nintendo the one that's doing it. But that doesn't make any difference to the 40 year old soccer mom who's having a blast with Candy Crush. 

Playing a game on ur phone, by yourself, when out of the house is not at all the same thing that I said, which was playing together in a group setting. Two absolutely different types of experiences and ever since the decline of Wii no company at all has tried to push this type of play style in a meaningful way.

Ur just speaking with extreme hyperbole, nobody has said anything about rescuing people from mobile. The point is that there are entire demographics and play styles that don't get supported on consoles, it doesn't specifically have to be Nintendo that decides to try capturing this audience but since nobody else is even making an attempt that leaves a potential opening for Nintendo to act on.

If you watch kids play on tablets they play in a very social way, they all gather around the tablet usually, so it does in a lot of ways create a social play experience.

So you want a console that encourages "group play" experiences .... ummm .... WII U? What's wrong with the Wii U? *Nothing*. It has many, many wonderful family-play games that encourage people to gather around the TV and play together. Nintendo Land. NSMBU. Mario Kart 8. Mario 3D World. Wii Party U. Just Dance. Wii Fit U. Wii Sports Club. Game & Wario. Mario & Sonic Olympics. Wooly Yoshi. Smash Brothers. Mario Party 10. Even inflation wise right now it's price is basically the same as the $250 that the Wii sold millions and millions on. 

The problem is not with the console not having these types of games. It has many (maaaany) fun, easy to play, "gather around the TV" experiences. 

The problem I think is you are limited in the types of game experiences you can provide in this setting (usually mini-game-a-thons), to the point where after the 100th game in that style ... the formula gets a bit stale and people get bored by it. That and the games are not free, nor is the Wii or Wii U ecosystem as vibrant/constantly changing/adding new content like smart devices constantly do. So this type of gaming was always going to be vulnerable to having its lunch money stolen by the next big fish (mobile games). 

To be honest though if they want to go the "cheap console" route ... then why not just do the hybrid machine approach? You could get a chipset equal to or slgihtly better than the Wii U in a mobile form factor today, slap a cheap but decent 1280x720 display on that, and now you have one single device instead of forcing people to buy two seperate devices they don't want (most Nintendo fans do not buy the console, opting for just the handheld alone 4:1). 

So why does there even have to be a console if all Nintendo wants is cheaper, low-end graphics. Mobile has advanced to the point where it can do visuals of that quality fairly cheaply. A Wii U + 3DS = $450-$500, a hybrid could cost $250 and do the same thing as both devices. 

The next Nintendo portable should have very good 3D graphics capabilities, so much so that it can run any Nintendo franchise, even the Xenoblades and the mainline Zeldas of the world, it's no longer the "kid brother" device that can't handle 1/2 of the "big gun" Nintendo IP. That's also been a problem for Nintendo ... why buy the console when the portable scratches the itch for Nintendo games for many people. This was always going to be more and more of a problem as the graphics in the portable got progressively better. Before you could say "well you can't have a real 3D Mario or Smash Brothers on a Nintendo portable" but that's not true anymore. 

That's basically what they attempted with the Wii U and its hardware design though; it didn't work out so well. I think it's a fairly bad idea to chase both markets in one product or setup. If the NX is indeed two consoles in one, they would be better off tailoring each unit to specific demographics and markets. The "one size fits all" marketing ploy is something only John Lucas sees as possible and it has never succeeded, not hugely at any rate.
Look at the iPhone, for instance, massively popular with more casual consumers but almost universally shunned by tech fanatics, Volkswagen Golf sells million to more casual drivers while it doesn't really appeal to those who want more excitement in their cars.
You can modify both the iPhone and Golf by offering a range of models with different specs, made so to appeal to customers with different preferences, but the products at their core, and their basic appeal, will still apply mostly to one specific overall group in the vast majority of cases.

If you chase two rabbits, you'll lose them both. This is exactly what happened with the Wii U and it could be seen coming from a mile off. Let's hope they don't repeat their mistakes and aim properly this time instead of attemting mass appeal and hardcore appeal all at once with one product.