I'm sure they do - at least right now anyway.  Last gen and before each playstation was so dominant a developer could confidently produce a game for it and not worry about other consoles.  Now though the Wii is dominant but has very different tech from PS3/360, while PS3/360 sell the big third party titles better but apart from a few core franchises its clear most HD games need to be on both or essentially half their sales.

So you can go Wii and its low cost but there's a lot of competition to succed, much of it from Nintendo themselves.  Or you can go HD and spread your risk over two consoles unless you want to go exclusive and get whatever perks you can for the privilage.  Or you can go HD then downscale for Wii (possible but I suspect not a good idea).  Or you can go SD then invest a lot more into new HD content to take the game to PS3/360 (which is also possible but adds a lot of expense).

Demographics would be more about the type of game - for example would you release a Gears of War type game on Wii alone?  I wouldn't as the market demographics and current systems indicate the 360/PS3 each have far better demographics for that type of game.

It's no accident PS3/360 top titles are very similar (exclusives aside) while Wii's are totally different exclusives you don't see on the HD consoles.

There may be more examples but only Lego games (Star Wars, Indy, etc) seem to lend themselves well to full multi-platform support from what I can see.

It's sounding more and more like it's not *exactly* an HD vs SD console issue.  From what I'm reading it's a combination of factors:

1. HD vs SD - porting considerations going in both directions, cost of HD vs SD development

2. User demographics - casual vs hardcore

3. Installed base

It's makes sense to say that getting more companies to bite the HD development costs can work for PS3/360 and against Wii, but I'm not sure the user-base is who needs to be convinced as much as the developers.  The problem in Japan is that the Wii is already so far out in front.

They may not have at first. They may have looked at each console on its own merits and considered the demographics as you suggest. But when one console stands so far apart from the other two and snags two thirds of marketshare it becomes a conflict of the leader versus the rest. And Sony needs to persuade developers to see it that way, as it effectively gives the PS3 a larger install base for the purpose of deciding what games get developed for it.

I don't think that you can make a casual/hardcore split stick when the console has 70% marketshare.

I think I understand what you're saying, now, regarding the need to get developers to focus on HD vs SD.  As far as the bolded statement, I'm not so sure.  From my own experience, I believe the wild success of the Wii is based on four factors:

1. Cost of the system.  It's still cheaper than any console except for the 360 Arcade.

2. Strength and quality of Nintendo IPs.  You can't get Mario, etc., anywhere else.  And the titles are kid-safe, i.e. - no nudity, blood, language, etc.

3. Non-gamer friendly controls.  My wife hates the 360 controllers, but likes the WiiMote controller.  It feels "natural" to her to point at what she wants to affect on the screen.

4. Group/party-friendly titles and controls.  Wii Carnival.  Wii Sports.  Wii Play.  Etc.  My brothers and parents beg us to bring the Wii over for family events, but no so with the 360.  When I *did* take the 360 over a couple of times, my brothers, my son, and I sat and played Gears of War and Halo 3.  The wives and my parents just ignored us and went to another room to play cards.  With the Wii, everyone joins in and has a great time.

All of the above seems to make the Wii a strong choice for gamers who normally would not be interested in playing Oblivion or COD4.  I call those people casual gamers, but perhaps that's the wrong term.

If only most of Sony's bosses are more friendly and less arrogant like him, PS3 would probably be closer to Wii than to fighting for second place.

The ps3's current position is a result of bad business decisions not bad PR.

This guy must be leaving the company soon.

Honestly this "war" is far from over. For the time being, it suits Sony and MS to focus on taking marketshare from Nintendo, really, and it actually hurts them a little to take significant marketshare from the other HD console (by, for example, trying to lock up exclusives from 3rd party publishers).

By this I mean, they shouldn't waste their time/money fighting for 3rd party exclusives, and should spend more time making the PS360s cheaper to develop for, and generally attractive to 3rd party devs and publishers.

Wait a sec... is the revolution over? Did Wii win? OR

Is this the part where my enemies enemy is my friend.

Sadly I believe Sony's looking for friends in the wrong area, by values alone sure... but Microsoft wants them out of the market, any sale Microsoft makes is a sale they hope Sony lost.

Of course hes gonna say that. The 360 has turned around in Japan as of late, and Sony are now in damage limitation mode.