Revenue for the first half was abnormally high in 2008 due to killer apps (Mario Kart, Smash Brawl, Wii Fit) while the latter half sank.  This year it's basically the opposite, an empty first half with all the killer apps loaded in the latter (Wii Sports Resort, Monster Hunter 3, Wii Fit Plus, New Super Mario).  We'll have to wait until the year's actually over to see if this market is "collapsing" as you claim.

^^
IIRC PS2 started at the price point PS3 is now. Avinash_Tyagy is totally right when he blames bloated costs for at least part of old market problems. Improved PS3 sales after the last cut seem to confirm this, although XB360 not doing so good as having been the cheapest for a year would make suppose is undeniably a sign that better focused efforts are needed too for the old market.
Also, Nintendo is quite successful to convert its last gen fans to Wii, judging from how many old gamers are in ferment for every new Mario, Zelda, Metroid, etc game released, so these really must be subtracted from overall old market, as Nintendo looks able to cater for both their old and new tastes. This doesn't rule out a growth, old market giving big signs of growth when both a decent price and a satisfying number of good games released requirements are met, should tell something about it.
But old market cost and innovation problems don't prove wrong that new style games can't always cater for old style tastes, you can't say  "here, take this beautiful Wii Fit" to people wanting CoD, Halo, FF, GoW, etc. There are still tens million people with these tastes, and even more if we take into account people both liking old and new style, so, it will happen simply this: if the old SW houses are not enough efficient and aren't able to deliver enough quality (and novelty to justify another purchase), they'll fail and the free space they leave will be eventually filled by somebody else. It always happened in the past too. The only sad thing about this is that bad management, both economic and of team efficiency, often killed excellent SW houses and studios too, in this very instant I look at a game cover before me and I think about Looking Glass.

Bloated costs makes risk higher, but billions are still at stake: have you ever seen capitalists retreat in this situation? No, but they'll try to cut costs wherever possible. And many will die in the effort, many others will march over their corpses, as usual.

Just curious: How many price drops did PS2 recieve in comparison to when the Wii received its first price cut?

Avin, Maelstrom has a website to himself, please refer to that instead of constantly linking it to vgc.

I find since this is a forum I'd have more value placed in your own conclusions rather than you jot down someone else and make a thread about it.

Unless of course you have some other agenda.

@Ail

You can't just look at revenue and say that a market is collapsing.

I could sell 10 pictures worth 3 million each over the year while someone sells 3 million pictures worth 20 cents each. Clearly neither market is collapsing or rising based on revenue or to be more overt; revenue can not indicate that a market is collapsing or rising.

You can look at a revenue and tell how much money that company was throwing around, and that's about it. Without understanding the costs of the different divisions revenue cannot be the ink to paint a good picture, even then the picture has less to do with market population and more to do with the companies health as to the investors share.

I am not looking at revenue in terms of companies profit.

I am looking at it in terms of consumer spending which is the main indicators economists have used for 100s of years to determine how a specific market evolves...............

PS3 was already on it's 3rd US pricecut (4th JP pricecut) by the time Wii got it's first drop.

Yeah I knew that ;) (sorta lol) But I meant PS2 didn't it receive like 2 price cuts in the same time frame Wii received 1?

No, actually what we saw is if you don't release games you'll see your sales plummet, NSMB Wii however shows the market is very healthy, just was waiting for content

Due to the Wii price drop coupled with the current hardware/software projections by Nintendo there is no way around it, customer spending related to the Wii will have decreased very significantly this year( at least by 20-25% based on Nintendo projections)... Now if you tell me that if Nintendo doesn't release a couple good games the whole Wii environment suffers terribly that is not good news.

The real issue is that in a recession period it seems Wii customers cut spending more on games/console than HD console customers..

Basically if they have to give up something, games will be among the first on that list. 

By comparison, Xbox360 related revenue will most likely be flat ( hardware revenue down due to full year at price cut compared to only 3 months in 2008 but software revenue up significantly). 

PS3 revenue will be up despite the price cut ( hardware revenue even or slightly up, software revenue up very significantly).