This is soo true! Even thou for me its snes till ps2(nes a bit to old but still fun!)

These giant block buster games with amazing looking open world yet there is nothing to do/no interaction with the world. Just the story/standart quest/rince repeat.

Even ff7 rebirth has this problem.

Nintendo and indies seems to be the only ones who puts gameplay first and graphics second and even that cant compare to the golden age.

There's also what are the best selling games of this past generation? GTAV, Minecraft, and Mario Kart 8 would probably all be tops, these are all games from the previous generation and all of them would run on a Wii U. 

This is blatantly false.

The console market is growing by roughly a few percentage points every year.
https://www.statista.com/outlook/cmo/consumer-electronics/gaming-equipment/game-consoles/worldwide

This ignores the meteoric rise of PC gaming and Mobile gaming.

Gaming is growing.

In the case of Microsoft, Nintendo and Sony, you don't *really* invest in a specific gaming brand.
You invest in the company.

And Microsoft being the most valuable company on Earth reinforces that investors are extremely happy and expect a return on their investment.
https://companiesmarketcap.com/

Nintendo is also doing stupidly well, the Switch is printing more money than even the Wii did.
https://www.macrotrends.net/stocks/charts/NTDOY/nintendo/gross-profit

Keep in mind that smaller scope games continue to be made relatively quickly.

And whilst AAA games get larger, more expensive and potentially sell more copies with longer development times, other developers are stepping in and filling in the gaps.
Go back 20 years and you wouldn't have games like GTA5, Minecraft etc' set to sell 100~ million copies, that more than makes up for costlier development costs.

Again, not every game needs that kind of investment to be a success. See: Palworld with it's $7 million dollar budget.
https://www.inc-aus.com/kit-eaton/palworlds-popularity-a-huge-win-for-small-game-makers.html

The reason for the job cuts is because jobs got artificially inflated during COVID, everyone was stuck at home, everyone was consuming digital content en-masse.

We saw engagement with digital platforms more than double during COVID as more people started to work from home.
https://www.sciencedirect.com/science/article/pii/S2773067024000037

Now we are seeing a market correction as markets return to normalcy.

Switch 2.0 doesn't need to exceed the Switch 1.0 to be successful.

They just need to be profitable, historically when Nintendo has done poorly (I.E. DS+wii to 3DS+WiiU) it was not met with significant layoffs, Nintendo as a company has always been relatively stable and ran relatively lean.

Iwata even took a paycut to prevent layoffs.
https://www.cnbc.com/2024/02/13/nintendo-ceo-once-halved-salary-to-prevent-layoffs-why-thats-uncommon.html

Some games require a strong player base to make them an enjoyable experience online... And the best way to do that is to be on as many platforms as possible.

This benefits Xbox gamers with it's smaller playerbase.

They have always technically been "PC companies".

PC stands for "Personal Computer".

Consoles for all intents are computers... And tend to be "personal" or "family" in nature rather than commercial or industrial devices, just like a desktop windows PC.
I.E. Sony advertised the PS1 as a Computer Entertainment device.

The difference with consoles verses IBM-based computers is that they are far more closed-off, walled gardens.

And because PC tends to invest a significant amount more in processing technology and ended up being generationally ahead of everything else on the market from other companies like IBM, PowerPC, ARM, MiPS etc'. It was a no-brainer for consoles to go down that path eventually and leverage scales of economy and adopt PC technology.

It’ll even itself out

It depends on whom you ask. The difference in estimated revenue from one research firm to the next can vary as much as twofold for any given year. All of them for some reason match quite closely the CAGR they project the industry to have in the coming years. I'm sure that's just a happy coincidence.

Bloomberg commissioned a retrospective study and the numbers were much more flat for dedicated gaming platforms going all the way to the early 80s, with just the '83 crash on the way:

There was a leap in 2020 with the pandemic that made everyone excited and there were lots of hirings and investments making use of the record low interest rates. Now that the party is over, it's clear that it's no longer sustainable. Some examples:

https://www.nasdaq.com/articles/can-2023-turn-the-fortunes-of-a-slowing-video-game-market

https://www.digitaltrends.com/gaming/game-industry-acquisitions-issues-2023/

https://www.gamesindustry.biz/newzoo-lowers-2023-games-market-value-forecast-to-184bn

Sweet sources!

Just wondering, when we account for inflation. Is the console/handheld (maybe PC for Steam & Microsoft) market value today better or worse than the console/handheld/PC market value in the past (Idk what would be a good year to pick, I want to say Wii/PS3/Xbox 360 era).

There's just a fundamental misunderstanding of how the financing industry works here.

The rate of return on investments, either debt or equity, has little to do with how much money the company makes, at least directly. Rate of return is all about the amount of risk.

If you're a start up company with an idea that may or may not pan out, and there's a good chance you won't ever be able to pay me back, I'm not going to lend you money unless either you promise me a very high interest rate (if it's debt) or I'm going to be entitled to a large percent of your profits (for equity).

For companies like Sony or Microsoft who have strong name value, are generally making money pretty reliably, and have large amount of assets, investors probably are not going to be demanding sky high rates of return. Even in the worst case scenario, debt holders are very likely to get repaid and Sony has enough assets to repay all of their equity holders if they had to liquidate, so it's a safe investment. If you're almost assured to give a return on your investment a even if it's a modest one, you'll find investors. The way to get higher rates of return is to go for riskier investments, not to find a company that's just making tons more money. 

I know the example in the OP was "dumbed down", but 100% rate of return. Yeesh, that's insane. In fact, Sony's WACC is about 5%, meaning for every dollar of capital (equity/debt) they are paying back a dollar and five cents. And as for demanding more of a return each year... ummmmm... they don't? They can't? If it's debt they're going to be *generally* locked into a rate for a specific timeframe. New debt investors may want a higher rate, but that's not a given. It's going to depend on a variety of factors. For instance, if gov't interest rates are rising, then investors will want more of a return on Sony debt instruments, because those are riskier than gov't bonds. But, if the interest rates are dropping, then Sony debt, or any other company's debt, will become cheaper. Shareholders generally can't demand money. They can either sell their stock or try to oust the board of directors the latter of which is incredibly difficult in a large public company.

So, the idea that they have to just keep on exponentially increasing profits to keep up is just not how it works at all. It is often perfectly fine for a company to remain at a stable and reliable level of profitability, as long as they're keeping up with inflation at the minimum. When a market becomes reaches a saturation point, and I don't know that gaming has, it doesn't just implode. Strategies may have to change, but it's not like "welp, every gamer has entered the market, time to close up shop". 

I'm not saying there isn't a legitimate cause for layoffs, but the OP is not presenting the reality of business. 

1080p is gross and antiquated.

Get rid of exclusives and timed exclusives.  Keep graphic fidelity and just make games shorter.  Not every game needs to be 50+ hours.  Problem solved.

Perhaps I'm making to simple, but spider 2 could have had a good amount of collectibles removed, shorter cut scenes and a bit less side missions.  Launch day 1 PC and sales could be 2x what they currently are.

Big budget games are sustainable.  Big budget exclusives are not sustainable.  

Edit

And of course go digital only and drop the extra cost of physical.

This is where you fail to understand. You are not looking at this as a whole. The Console industry has always been this way, it started when companies were choosing to be different all the time. Did you game during the Nintendo and Sega era? If so, then you would have seen how different companies were back then. Always trying new things to break the market open. The issue we have today is, the market has reached its peak. Unless these manufacturers go full experimental mode with their next line up of consoles, I can't see that happening. It's too risky and many have fallen straight out of the industry for trying to innovate. These companies are playing it safe now, unfortunately playing it safe only keeps the same customers, it doesn't create new customers.

I also don't ever expect Nintendo to put their games on other platforms, not unless they are on the verge of closure, and even then, they probably would rather just die than give up their IPs. In saying that, what I mean is that Nintendo will find ways to please shareholders if they start to fall behind targets. Nintendo have been smart with their approach over the years. They develop affordable hardware and have focused on a market that has been lacking AAA gaming and that's the portable hybrid market. That will soon be flooded with options as the years progress. Its only going to get harder for Nintendo as more competition arrives.

As for Sony following Microsoft's way, it's pretty simple. Sony are not doing enough for their shareholders, and they know they can't compete with Nintendo in the portable market, they have tried many times. Sony are not set up for that style. They have designed their structure to make high budget AAA experiences, it will all need to be shuffled around if they start focusing on Nintendo's way of gaming. 

Xbox might not be doing as good as the other two in raw sales figures; however they are set up for the future, they can adapt and evolve a lot quicker than Sony and Nintendo if the digital, PC, Streaming future started to explode tomorrow.

But they did ...

Nintendo lays off 320 workers in Europe

They didn't in Japan, where the law is very strict, and terminating an employee is possible only in extreme cases.