The Wii has, in a sense, prevented another crash from occuring. The new casual shovel-ware market is, at least, affordable from the dev cost perspective.

PSN, XBLA, and WiiWare is where you're going to see the vast majority of game innovation in the next few years. Its too expensive to risk millions on a new IP that's not deeply rooted in a proven market (like TPS/FPS games, or their new variant, the "superhero powers" game). Look at what happened to Atari/Infogrames with their Matrix online game fiasco (cost like $40mil to make -- practically ruined Atari all by itself).

Unless the big publishers embrace the little developer, and lay off with the ridiculous advertising budgets, etc., they're gonna have to survive on the next years iteration of sports franchises and online shooters pretty soon. They practically already are.

The age of the high-tech new supergame IP is nearly over.  Give epic-quality games like GTA4, and MGS4, and upcoming titles like MAG, Spore, and Fable 2 a big embrace when you get em* -- because I don't imagine they'll be too commonplace in the future market, unless they are clones of a genre that has existed for eons.

*I named these games because they are all big-budget and decently innovative, or at least their game series is.  I don't really think many shooters, like Resistance 2, Gears 2, etc. really qualify as innovative -- yet... people look forward to them.  Like they look forward to next year's Madden, I guess.  Bread and butter.

No using logic!

Ontopic: To cause A crash it would take either Sony, Mircosoft or Nintendo to drop out.

There seems to be several different directions people are pulling downloadable content at the moment, and it will be interesting to see how it turns out ...

1. Companies who see the lower overhead as a way to produce low budget (experimental) games and sell them at a low cost to eliminate barriers to entry for most consumers
2. Companies who see the lower overhead as a way to produce biger budget games and sell them at the same price to increase profitability
3. Companies who see the lower overhead as a way to release a game in smaller (bite-sized) pieces each sold at a low cost, but the total sale price of all content is far greater than a game normally sold for which results in dramatically higher revenues and profit.

By Nintendo using the Wii, and to a lesser degree Sony's PS2, to turn video games into a mainstream entertainment industry across many, many demographics the industry enjoys some perks that Movies and Music do, namely being very recession proof. So slowing economies and economic hardtimes, short of extreme depression, will not crash the industry.

What will crash it is holding on to archaic distribution models. Right now there are only a handful of distributors and they show extreme reluctance to change models. Nintendo is the most progressive with tiered pricing between 49.99 to 29.99 and Sony comes in second with whole games being available for DLC, but if the price fixing mentality is not reformed we could expect significant losses.