This is misleading. 

There was a huge difference between arcades in the mid 80s and consoles in the mid 80s.  (I'm talking about the US here.)  Stores were clearing out all of their consoles of every kind.  There were bargain bins full of Atari games for years.  The console business appeared to be finished and done forever.  The arcades were doing just fine.  People went to them regularly throughout the mid 80's.  The arcades did not appear to be in jeopardy in the slightest, while console gaming was seen as a fad.  It was going to be replaced by computer gaming permanently.  At least, that was the conventional wisdom at the time.

The most successful time for the arcades was easily the early 80's.  So revenues would be down in the mid-80's.  However, arcades were in no threat of going out of business.  The arcade business as a whole was doing just fine.

In US? I don't think so.

Revisionism is not a good thing without historical background.

The question, and difficult question, is worldwide.

That's is a good question.

Console's USA market is well known and documented, this is not the question.

I have to touch on this as I addressed computer gaming earlier in what it ran into when the 00s arrived, the problem I see with people saying arcades and computers is not one person looks at the long run in their argument and goes off the basis that because Arcades and Computers were there at the time gaming would have survived when seeing how those two branches went in the long run casts a lot of doubt on this chain of thought. For example Arcades did fine in the 80s but in the second half of the 90s however they began to decline sharply this is notable because earlier I highlighted the plight of PC gaming in the 00s as at that point Arcade gaming was really on its last legs.

The point being the two alternatives to console gaming were both in a dire situation at the same time and with out the modern consoles keeping the industry going I don't see how gaming would even still be around if anything the Arcades and Computer arguments people bring only suggest it would have just delayed the inevitable. The NES rebooting how consoles were approached and expanding the market is also what gave the market the revenue stream to facilitate it's huge growth in future and attract the likes of Sony and MS.

I agree that consoles are the most important part of the video game industry.  The NES is what caused so much money to be present in the game industry and it did attract other console makers (Sony, Microsoft, Sega, NEC, etc...).

However, you have to also realize why the arcades died off.  They did not die because of lack of customers.  They died because of lack of games.  In the 90's, fighting games were so popular that at least 50% of the games in any arcade were fighting games.  However, no other genres were popular anymore.  The gamers were there, but the games weren't.  The reason is that most game makers moved to consoles.  It was far easier for them to make money on consoles, so consoles bled arcades of all of their potential games.

The arcade business model is fine.  Arcades are still going strong in Japan (or at least they were before COVID hit).  Arcades would have continued on their own in the absence of consoles.

The PC is a similar situation.  PC gaming really came into its own in the 90s with a combination of the mouse, Windows, DirectX, etc....  PC gaming still continues today.  Consoles do not keep PC gaming going.  If anything they hinder PC gaming, because consoles take away from potential PC gamers. 

I said this in an earlier post, and I'll say it here.  I think, without the NES, the PC would be the main gaming platform, but revenues would be about 1/4 of what they actually ended up being.  Gaming could survive just fine on the PC, but it wouldn't be nearly as big of an industry.

Arcades were a limited business to begin with where it ended up was where it was always destined to be fighting games were one of the big fads in the 90s and like everything else that floods the market it got oversaturated quick and the genre began to die in the late 90s and by the time the early 00s came along it was on life support, Arcades weren't going to survive because it was a business built on riding trends and the trends were very limited for it no other genre was popular on them because those trends had ran their course or a trend couldn't be created for them.

PC I know all about because I dabbled in PC gaming in the late 90s the are factors you're forgetting and one is many of the games were inspired by the NES influence with SMB influencing many key designers like Carmack and co secondly even with the resurgence in the early 90s it ended up being a bubble that burst come the 00s because of what I highlighted earlier. Not user friendly, rampant piracy leading to low returns for most developers (this was the era when programs like Kazaa and Limewire took off) etc... PC wouldn't have taken off if the NES wasn't about it would have likely crashed the very fact that EA who were anti console in the 80s declared the platform dead to focus mainly on consoles show PC was not in a good spot, even when Steam arrived it took 7 years to begin to fix any problem on the platform with out the console market we'd likely had seen a third crash there and then as nothing would have been around to sustain the industry.

The expanding of the market that consoles brought and the innovations they inspired are really what kept the market alive as that's what gave the industry sustainability to whether future storms as the growth brought in more money and big players to further push it.

Though the NES didn't save gaming, it may well have saved Activision. They needed a place to put their games, and the NES provided that.

Errr... Arcades boomed in the mid 80s up until the late 90s, but the reason they eventually died off is because console gaming took off and eventually caught up to them. They would most likely still be a thing today if consoles hadn’t managed to be a more convenient and cheaper alternative to them.

My belief is that Nintendo and the NES didn't save gaming, but they did prevent the market from being set back a decade.

In the mid-80's, you had three main regions (USA, Japan, and Europe) and three main pillars (Arcades first, followed by consoles, and PC in distant last place). The question of "Did Nintendo save gaming with the NES?" implies that all three pillars in all three regions would have either been extinguished or otherwise would have remained stagnant indefinitely.

In the arcades, I don't think that gaming as a whole was in true mortal peril. On the arcade front, big games continued to be released during the mid-80's. 1983 had Donkey Kong 3 and Mario Bros, 1984 had Space Ace and Marble Madness, 1985 had Paperboy, Hang-On, and Gauntlet, 1986 had Out Run and Gauntlet II, and 1987 had Blasteroids and RBI Baseball. None of these games sold as well as Donkey Kong or Pac-Man, but they were games that sold thousands of cabinets, from different developers located in different countries. Arcade gaming never fully recover after the Crash of 1983, but it did stabilize even before the NES hit its stride in the West.

Next up, we have to address other console manufacturers. In short, I have little doubt that another manufacturer besides Nintendo could have filled a similar role, at least in Japan. The SG-1000 came out the same day as the Famicom and despite strong competition, did well enough for Sega to follow it up with the Master System. The Sega Master System, though widely considered a dud, ultimately sold over 17 million units worldwide, though most of that was outside Japan and the USA. The PC Engine would have likely released off of the success Hudson had on platforms besides the NES. And bear in mind that the 3rd party support that Nintendo largely monopolized in real life would have been on Sega and Hudson consoles.

As for Europe, what about Nintendo? The NES barely outsold the Master System there, and the Genesis outsold the SNES. And of course, PC gaming owes little to Nintendo, besides being indirectly responsible for a wave of sidescrollers in the 80's and 90's.

THAT BEING SAID:

Even if every third party game sold just as well on other hardware as on the NES, it doesn't change the fact that Nintendo was the lead creator of software by far. On the Famicom in Japan, 23 of the 43 million-sellers on NES were 1st or 2nd party games, including 16 of the Top 20 sellers. Games like Bomberman, Lode Runner, and Star Soldier might have sold a million copies on the Sega Master System or some other hypothetical 8-bit hardware, but they wouldn't have reached the heights of Mario or Dragon Quest. And speaking of Dragon Quest, that series could not have grown to the extent it did without a massively popular platform to support it, so don't expect the JRPG to become as big a deal in this timeline, even if it does migrate to some other console.

Without Nintendo's games to drive hardware sales, it is unlikely that third party hits would be able to sell as well, even continuing into the 4th generation of gaming. Companies like Sega, Hudson, and SNK would be fine, being the primary hardware makers in Nintendo's place, but other companies would have to rely more heavily on arcade games, and even those arcade games wouldn't sell as many home console ports. So companies that did much of their work on consoles like like Squaresoft, Enix, Bandai, etc? All are going to be a lot smaller. And even arcade juggernauts like Capcom would have less cash in their pockets. Because really, how would they have sold the 6.3 million copies of Street Fighter II that were sold on the SNES?

Which brings us to more modern times. Why would Sony ever make a console in this environment? Even if someone else made the same mistakes Nintendo did, would such a small market be worth the investment? Later, why would Microsoft make the Xbox without the looming PlayStation menace.

In a world where Nintendo never releases the NES, and instead sticks to being a third party and MAYBE releasing a handheld, I imagine the console market worldwide would be half of it's real life size in the late 90's, and maybe to this day. I figure that after the 90's, a lot of PC developers would go broke without the ability to also release their games on highly popular consoles to make some extra money. Digital Distribution would help PC development eventually, but only after more developers are killed by the niche size of their markets.

Conclusion: The NES didn't save gaming, but it did more good for it than any console ever since. Which is close enough so that I can see why people say it saved gaming.