I heard they have either a 3nm or 2nm fabrication in testing. Insane If this comes. I think that would be as close as we can get before we hit the physical limit of our current method. But I heard there's some cool research going on that will introduce a new method for semiconductors to shrink even further so who knows. It's still insane to think how small these dies are.

I think you are doubting what these companies do for no reason. They will push 8k down our thorats even if we don't want it. Trust you me. And mid gen upgrades are profits for Sony and Microsoft so I think they will update it. The funny thing is now that Google's project stream beta is up and I'm playing it, I won't mind streaming consoles. What I think they could do though, is provide small discs or carts that grant access to a game for streaming. That way we can have our cake and eat it too as anyone with the disc could access it and the physical market + 2nd hand market stays alive. Developers will never do that though. 

What kind of terrible things happened this gen that we have to prevent it next gen?

Of course. Microsoft and Sony made a shitload of money with their new consoles, because there are more than enough people stupid enough to buy two consoles. Like me, for example. =P

Anyone saying no doesn't understand business.

Yes that is what he was talking about and thanks for that information! 

No, not mid-gen. There will be an upgrade after 2 years and another one after 4 years.

I believe this is the way to go. If they wanted to make an extremely beefy hardware to last an entire gen today (8+ years), they would have to go much higher than the dangerous $ 499 budged wall limit. Better try to stay within the limit, but upgrade the hardware more often, like every 3.5 years.

Though i think it's very likely, this is the most important point. There would have to be at least some intermediate step. Next gen consoles will probably start with 8nm/7nm process, and that means console makers will need smaller manufacturing processes that also need to be cost effective.

Right now we're even quite a bit away from 7nm/8nm high performance. Intels 10nm hasn't work as planned so far and minor steps like 12nm bring only minor improvements. Global Foundries even pulled out of 7nm manufacturing.

With 7nm being that difficult and showing many delays again, 4nm could be very far away. That way future hardware generations could either last way longer and we might see midgen updates, but only after quite some time. Or the console makers won't pull out further mid gen updates. But in that case the gen after nextgen might be not that much more powerful.

By the way, this isn't a consoles only problem. If you look at PC-GPU's the steps between generations get smaller and smaller. Without realtime raytracing the current GeForce GTX 20X0 would have been rather disappointing.

The use of multigate devices to come close to physical limits was a thing expected all along.  None of these manufacturing nodes are what the ITRS used to consider 7 nm or 5 nm, though. TSMC's 3.5 nm (and presumably Samsung's equivalent 4 - 2 nm GAAFET nodes) are what it should have been called the 7 nm node, if foundries hadn't transformed technical node names into marketing names. That's why Intel's 10 nm (which is actually a 11 nm node according to ITRS's standards) is more complex and efficient (though slightly bigger) than Samsung and TSMC's 7 nm nodes.

The next step for more demanding applications, mid to long term will likely be 3D circuitry (bonus points if CNT or copper-CNT connections are viable) but price and heat might pose a problem to apply it in future generations of consoles.