I think we're essentially in agreement. 

I don't think these numbers work out, at least for our purposes.

The Nielson surveys are dealing with households, which is a bit different than what we're talking about. I'm pretty sure we all mean (at least I did) people who played games primarily on the Wii, since that's really what's relevant if we're trying to figure out what factors are driving the Switch's success. 

If we're using households, then a large amount of that ownership is going to be purely incidental. If a person is buying a Switch now, and they lived with their grandma during the Wii days who was one of those octogenarian Wii fans you hear so much about and they never played it themselves, then their Wii ownership didn't really factor into the Switch purchase. Household numbers don't give great insight into what kind of users are buying a console.   

And,, I'm not sure about these numbers anyway. If a console owning house generally had 1.38 consoles, That means that there have to be more single console owning houses than double dippers... right? Unless Wii owners are vastly overrepresented among double dipping households, then 62% can't be right.

Which begs the question of whether there was only a 5% overlap between 360 and PS3. Which sounds really sketchy to me. The two systems applied to a similar userbase. I get that they are somewhat redundant, but exclusives and the ability to play with friends who own other consoles would drive it to way higher than 5% imo. And the data we have, if accurate, seems to bear that out. As of 2009 according to NPD, 14% of Wii owners had a PS3 and 26% had an XBox 360. https://www.alistdaily.com/media/most-wii-owners-do-not-own-xbox-360-ps3/ So a maximum of 40% of Wii owners owned one of the other two systems. This number could have drifted up by 2012, but 60% would be really high.

The PS4 data is really suspect to me and wouldn't jive with a 5% PS360 crossover.

Unless I'm missing something, if you add it up you get to about 14 million 7th gen systems among the 6.3 millionish PS4 households in the US which didn't own a 7th gen console. This means either virtually all of them owned two consoles (or alternatively an offsetting number of people owned one and three respectively). That's pretty sus. Of course, these are early adopters though so they're bigger gamers. Still, that number seems crazy high. 

But if that number is even remotely accurate, then 5% can't even be close. If there were 5 million households that have a Wii, even if all of those households had a second console, then you're left with about 3.5 million PS3s and 360s among the 1.3 million or so non-Wii owning PS4 households. Even if all 1.3 million of those people owned both systems, there would still be be about 800K left over. Meaning we'd have to have 800K PSWii60 owners which would be about 12% of the PS4 households on their own.

These are early adopters so their habits are going to be different than the entire market, but they can't be THAT far off that a 5% overlap with PS3 and 360 would make sense. So, some figure here is off. 

And... according to Nielson the figured were very different in June of 14.

https://www.neoseeker.com/news/25445-sony-31-percent-of-new-playstation-4-owners-hopped-aboard-from-xbox-360-and-wii/

At that point, the number of non gen 7 owners was 17%. Of course, the number could go down over time, but you'd figure the earliest adopters would be the most likely to have been 7th gen gamers, so if anything we'd expect those numbers to be going up and not down. 

They also say that 31% of PS4 owners were Xbox 360 or Wii owners that did not own a PS3... If around 60% of PS4 owners in mid 2014 were PS3 owners, and 31% were 360 or Wii owners who did not have a PS3... Then together, that would make about 90%. About 10% of PS4 owners didn't have 7th gen systems... So... that means there would have to be zero crossover between PS3 and Wii/360 owners.

So I dunno. Either these numbers are off, or they're being reported wrong, or the terms are being used in unintuitive manner. 

I'd say the best evidence we have if we want to figure out the type of audience is buying which system, the best evidence we have is the games that they're buying, particularly when they're big enough that we're getting figures from the company.

The video game industry still clones Nintendo games however it is the small independent developement studios that mostly do it instead of the big publishers

Why? Because almost every Nintendo IPs is a genre king which Nintendo locked down a lot of years ago.

You can't expect to match Nintendo by copy them and then throwing a lot of money at it hoping it flys off the shelves because people already recognize the Nintendo series as the real deal.

So it's the smaller guys which have lower costs and small expectation that pay homage to Nintendo the most nowadays.

Indie games are such a match made in heaven on Switch because a lot of them are directly inspired by classic gaming which Nintendo led in mindshare due to them having the strongest legacy in the business.

@RolStoppable
I understand what you are trying to describe however I find it to be flawed and misleading especially the grid because it's too rigid (think for example how Dreamcast had a sister arcade board which was the second most supported of all time only behind the Neo Geo MVS or how on Switch there are games like Divinity Original Sin II).
You described the difference, once very recognizable, between computer games, arcade games and video games and how video game consoles with time drifted more toward more time consuming and cinematic games over score based and arcade like experiences.
Nintendo clearly has a vision of video games that greatly differ from Sony and Microsoft (and all the big established publishers that sell Xboxes and PlayStations with their popular software) but that was always the case.
The entrance of developers with computer games background on consoles was favoured by Microsoft but was always bound to happen due to the inevitable rise in software engineering complexity.
Even today the multi platform development paradigm have more in common with computers and their multi configurations than the old consoles which required to develop each version around a specific hardware and the indie boom began on PC only to later expanded on consoles.

If I had to broadly categorize the console space in the last two decades I would use parameters like third-party driven model vs first-party driven model and de facto standard vs custom functionality (if one look at it closely would see that the latter depend on the former).
This classification encompass well the difference between PlayStation/Xbox and Nintendo.
Though one might say that with Microsoft recent push toward platform agnostic digital services, even the duality between PS and XB is at odds.

Well yes, who don't know Nintendo have a hard time to grasp that uniqueness/dokuso was always part of Nintendo's path to success. Funny anecdote: when subordinates showed to Hiroshi Yamauchi their latest products in development he would always ask them why they thought people would buy it when commercialized. If they answered because the product was marginally better than the one from competitors Yamauchi would throw a fit of anger because he always demanded to their subordinates to come up with something unique and desirable. He knew that the company would make more money and the success be more durable if they created new uncontested space instead of stupidly compete with others for what was already established.

A console like Wii is more in tune with Nintendo's DNA than a console like GC (which tried to ape PlayStation). In early '00s Nintendo didn't retreat, on the contrary they leveraged the company core strengths.

As for Sony/PlayStation changing I disagree with you.

I mean Sony, just like Nintendo, had to adapt to modern times, therefore changes happened, but they did so by following their own DNA (just like Nintendo went through modernization following their own DNA).

The roots of the problem is that Sony and Nintendo were always totally different kind console manufacturers, with totally different philosophies. With time these differences became more and more pronounced.

Sony was always a third-party driven console maker which meant Sony decision making was always based on third-party publishers' attitudes. Sony always focused on what is cool at the present (what's "cool" changes with each epoch, it's situational) and always strived to bring videogames near more mature entertainment forms like cinema (note: creators in new entertainment form suffering from inferiority complex compared to other established entertainment forms and trying in some way to imitate them to seek legitimacy was always a common behaviour).

In contrast Nintendo being a first-party driven console maker always took their decisions based on their vision and their games always (at least from early on) aimed to be unique and to base their entertainment value on basic instincts of the human beings because they want them to trascend time.Think at the exhilarating action of sliding down a slope, that sensation is common in every human being, be them male or female, young or old, born in 1900, 2000 or 2100, independent from the cultural background. That's what Nintendo try to use to create games whose value is eternal.

You said that Nintendo remained true to its roots while Sony changed, in reality both remained true to their DNA it's just that the identity upon which they base their success acts differently with changing times.

As for the last sentence, Sony cannot compete with Nintendo on Nintendo's terms and vice versa Nintendo cannot compete with Sony on Sony's terms.Their skillset are too incompatible to compete head on.

Since we are touching the argument, there is another big difference between Nintendo and Sony which pertain the commoditization of videogames. It isn't often talked about but I expect in the future to rise in prominence.

It was good of you to include the "lost" 3rd generation.  In gaming magazines of the day, the Atari 5200 and ColecoVision were both very much advertised as the "Third Wave" or "Third Generation" consoles.  I think the shortness of their lifespans is what led to their being lumped in with the 2nd generation systems.  But, there is no denying the jump in graphical quality from an Atari 2600 to the Colecovision especially when comparing ports of the same games.  That being said, when speaking of their lifetime sales, I think a bit more respect should be given considering the reason for their abrupt end.  The Colecovision launched in August of 1982 to extremely popular reception and sales for its time only to be massively impacted by the North American Video Game Crash of 1983, just one year into its lifespan.  I wouldn't call Coleco's sales "pitiful" when considering the timeframe they took place in, and the massive external factor that took place which removed any possibility of longevity in the marketplace.

We need to know the number of PS360 owners to figure out what percentage of Wii owners own another system. 5% seems crazy low to me. Data on PS4/Xbox One ownership indicates that's also not the case.

https://www.gamasutra.com/view/news/364705/Data_suggests_almost_half_of_Xbox_One_users_also_own_a_PlayStation_4.php#:~:text=While%20this%20may%20especially%20prove,own%20an%20Xbox%20One%20X.

Dismissing Wii Sports as selling only because it was bundled is ignoring the possibility that a lot of people bought the Wii because it was bundled with Wii Sports, which is part of what we're trying to get at. Wii Sports sales in Japan gives us a baseline, but it's quite probable that Wii Sports would have sold better in other regions, and there's a lot of data to support that. For example, in 2012 when Mario Kart was by far the more common bundle (I don't believe Wii Sports was even really available at that point as a bundle) Wii Sports sold 1.5 million units, with 2 million Wiis being sold. Even if half of the Wii Sports sales were bundled, then about half of the people who bought a Wii in 2012 wanted Wii Sports. And if the ratio was actually 70%+ (which I believe it was) then even more people wanted Wii Sports. 

As for the other games selling on the Wii, they are similar to what sold on other Nintendo consoles, but they can't literally be the same people who bought other Nintendo consoles, because of the math. So, Wii gamers ultimately wound up with similar tastes to other Nintendo fans, but obviously something helped bring in more people. 

But, most of this is kind of tangential in the question of the evolution of the market. The question that's more relevant to me is what happened to that fanbase.

100% of Wii owners were gamers, whether they were before of after they got a Wii, and the question is whether they stayed gamers. There's evidence to show a decent amount went on to buy a PS41, but that would still indicate a huge drop off. If those gamers stayed in the market, a large chunk would have to be gaming on the Switch, which I think is largely supported by the evidence. 

I think your whole table is a mess.  Your terms are not clearly defined.  When I offered some constructive feedback, you got into an argument about it.  

Here is a more logical version of the same table.

For reference, I'll use the following terms.
1. Arcade Games: Consoles to play arcade games at home.
2. Arcade Evolution: Consoles to play games that have evolved from arcade gameplay.
3. Balance: Consoles that try to strike a balance between 2 and 4.
4. PC Evolution: Consoles that prioritize playing games which evolved from PC gameplay.
5. PC Games: Consoles to play PC games.

Also I define "Arcade" and "PC" based on what they primarily meant in the 20th century.
Arcade: Short, intense, easy to die, mainly challenges the body (e.g. coordination), uses a variety of controls especially joystick (or d-pad by extension), local multiplayer
PC: Long, slower paced, content heavy, focus on cutting edge graphics (including 3D graphics), challenges the mind (i.e. strategy, puzzle solving, etc...), uses primarily keyboard and/or mouse controls (or touchscreen and analogue stick by extension), online multiplayer

Generation 1-3: The focus of these consoles is to port arcade games onto a home system.

Generation 4:  Nintendo actually changes the nature of a home console, because of the Famicom Disk System (FDS).  If you look at the Japanese release dates of every game that came before The Legend of Zelda, you will actually see a bunch of pure arcade games (essentially the black box games).  The FDS introduces the ability to save data while still using the elementary Famicom controller which introduces a new type of game which has arcade controls, but is made for the home like The Legend of Zelda and Metroid.  Sega and Atari are still making systems primarily for arcade games.

Generation 5: Nintendo doubles down on combining arcade controls with content heavy games (e.g. Super Mario World, A Link to the Past, etc...).  In spite of this there are popular games that are both purely arcade games (e.g. Street Fighter 2) as well as PC Evolution games (e.g. Final Fantasy 6).  The Gameboy largely plays games like the NES and SNES.  The Neo Geo is quite obviously an arcade machine.  Sega is also still focused mostly on making arcade style games.  Some of these are pure arcade ports (e.g. Altered Beast, Golden Axe, etc...) while other games could have easily been put straight into the arcade (e.g. Sonic, Streets of Rage).

Generation 6:  All of the console makers move toward the PC side by moving heavily toward 3D graphics.  The PC was making 3D games for several years before this generation came along (e.g. Myst, Doom, Wing Commander, etc...).  Therefore PC game developers have a head start on first party developers when it comes to making 3D games.  Going forward game design ends up borrowing more and more from PC games out of necessity.  Nintendo and Sega only move somewhat toward the PC side, but still try to provide experiences that are somewhat arcade-like and Nintendo even sticks with cartridges.  Sony goes very strongly toward the PC side by adopting both a CD ROM and heavily encouraging 3D graphics from third party developers.  A lot of notable Playstation titles are either PC ports (e.g. Tomb Raider) or heavily inspired by PC style gameplay (e.g. Final Fantasy 7/8/9).  

Generation 7:  More of the same from the previous generation.  PC developers still have the advantage, so now games like GTA (a PC series) fully come into their own.  Nintendo is the sole maker of any significant handheld in this generation mostly because of their approach to hardware.  They go for cheaper/weaker hardware that does not drain batteries.  This philosophy paves the way for the GBA SP, which has a rechargeable battery.

Generation 8: Nintendo regained the top spot in the home market by bringing in a bunch of new customers instead of competing for Sony's customer base.  They also return more to their arcade roots with the Wii.  However, they get even further away from their arcade roots on the handheld side by including a touchscreen which simulates mouse controls.  Their approach to the DS also brings in a bunch of new customers.  They key to Nintendo's success in this generation was neither becoming more arcade-like or less arcade-like, but in offering experiences that would bring in new customers.  

Generation 9:  The Wii U and 3DS were both more complex and more expensive systems compared to their predecessors.  Consequently they both alienate a good chunk of their former fanbase. The Vita fairs even worse, and ends up killing Sony's handheld line.  PS4 gains a price advantage over XB1 early on and then later has a notable advantage in exclusives which guarantees it's commanding lead for the whole generation.

Generation 10: Sony and Microsoft continue to make consoles that are following the same philosophy of their predecessors.  Nintendo merges it's home and handheld lines into the Switch.  Every notable first party game on the Switch has a corresponding title on either the Wii U or 3DS (except RFA).  This shows that the main draw of the Switch is in it's hardware value.  In combining their home and handheld systems they took two low systems that many customers considered low value and made one very high value system.  In buying a Switch, a person essentially gets 2 systems (a home and a handheld) for the price of one.

In summary, the history of the console market shows that customers tend to buy the system that offers new experiences.  With the Famicom, Nintendo actually moved away from pure arcade gaming with the Famicom Disk System, and this move changed console gaming forever.  When 3D came along, success went to Playstation because it was the most PC-like system, and the best new experiences for most console gamers came from the PC or PC-like games.  When Nintendo made the DS and Wii, they were offering new experiences that gamers had never encountered before, and they greatly expanded the market (temporarily).  

However, since the DS and Wii, there has not been a system which came along to offer radically new software experiences.  Sony and Microsoft are following the same path they always have.  Nintendo, likewise, is largely making the same type of software that they have been making for decades.  The new experience with the Switch is on the hardware side.  Home console gamers can play their big budget games on the go if they like (e.g. BotW, Mario Odyssey, etc...).  At the same time handheld gamers are able to play games that are actually a new experience to them, since the Switch can play games much more sophisticated than the 3DS was capable of.  And of course, gamers who were already playing both home and handheld systems, get a very good value by buying one system instead of two.

The Switch is a different type of console than what has come before, because the innovation is purely on the hardware side and not really on the software side at all.  The Famicom, PS1, DS and Wii all innovated on the hardware side to offer different types of games.  The Switch is not offering different types of games.  It is offering better iterations of previous entries, much like the SNES did.  The lack of compelling new kinds of software indicates it will not appeal to non-gamers.  The value is entirely in the hardware, and therefore it is going to appeal to established gamers who understand that it is a better way to play the games they already enjoy.

I'd have to disagree with your moving the Genesis/Mega Drive from "Arcade Evolution" in Rol's table into "Arcade" in yours.  Games like Phantasy Star I-IV, Dragon Slayer I & II, Shining Force I & II, Shining in the Darkness, Sword of Vermillion, Surging Aura don't fit the narrative of Sega being "mostly focused on making arcade style games".  

I put the Genesis in column 1 to highlight that it was much more of an arcade console than the SNES. (And really for every generation Sega is more on the arcade side than Nintendo is.)  There were lots of arcade ports on the Genesis including quite a few by Sega.  I struggle to think of one arcade port on the SNES that was developed by Nintendo.  

On the other hand, you have a point in that Genesis is not a Neo Geo either.  Sega was making other types of games too like RPGs.  What it didn't really do so much was make "arcade evolution" games.  Either they made an arcade game or they made an RPG.  Meanwhile Super Mario World was an action platformer with an overworld and save files.  Sega wasn't really making too many games like this, "arcade evolution", but that was the focus for Nintendo.