Just a few points about third party retardedness:
They're not really in a very good position financially, and that comes because rising development costs and the blockbuster model. This means that people saying that they should make AC2 level games etc for the Wii are *completely* missing the point - it's *exactly* the model that's producing AC2 and MW2 that's fucked up. This model produces a few large scale successes and lots of large scale failures - sometimes it works out ok, other times, not. Overall, it's clearly not working out, except for a few smarter (and luckier) publishers.
This situation was also very easy to anticipate (even I expected this and I'm no expert), so third parties with actual good "leadership" (aka not managers jumping around different businesses but people who know something about the actual market) should not have put all their money in one basket. They should have continued to support the PS2 (which was doing very well) and other, cheaper platforms (handhelds, downloadable stuff etc), and experimented with different business models, genres etc. They probably could not have anticipated the Wii, but they should have been happy for a chance to be able to continue PS2 scale stuff. It might not have worked of course, but that was a pretty good extra chance and they quite obviously didn't even try to take it. What they did was the typical ignorant manager response of copying successful stuff until the market's saturated (not just on the Wii, see music games also...and no, CoD type stuff won't keep growing forever either).
Now, regardless whether the Wii did or didn't work out, it was obvious that the HD stuff would lead to more consolidation, fewer products etc, unless of course the (traditional) market could expand significantly. Huge software sales for huge products is actually *bad news* if the total money spent on products by consumers doesn't increase at the same rate. It's not like the Wii is a saviour for third parties (definitely not if this only depends on Nintendo) - it's more about high cost development fucking everything up predictably.
The reason for this is imo because of the preference of western game makers for technology driven stuff, which is demonstrated by the premature introduction of HD, all the current talk about 3D or the Natal approach and its reception. There are indeed a few companies who do well with technology, like Epic for example, but it's obviously impossible for all companies to be like them. Even Blizzard, arguably one of the highest quality Western developers, and inargubly the one that's doing the best financially, isn't technology focused. Not to say the repeated demonstration of lack of neutrality towards platforms (thus lack of professionalism), and the wish for Nintendo to start doing badly already :-/
All in all...the industry is retarded. It's losing money, the whole HD generation will most probably be in the red overall (Sony's already at the end of their PS1 profits iirc), and they have noone else to blame but themselves. If you're losing money and someone else is making unprecedented profits in the same market, you're statistically retarded (as this is only really true for large producers putting out many products and not single-game developers who can easily fail based on luck, even with the best product in the world).
Stumpokapow said:
Fun facts;
Worldwide
This gen's first place system is outpacing last gen's first place system
This gen's second place system is outpacing last gen's second place system--in fact, it's outsold it.
This gen's third place system is outpacing last gen's third place system--in fact, it's outsold it.
US only
This gen's first place system is outpacing last gen's first place system
This gen's second place system is outpacing last gen's second place system--in fact, it's outsold it.
This gen's third place system is outpacing last gen's third place system--it'll outsell it in the next 2-3 months.
This doesn't mean much, as the scale of development for 2nd and 3rd place seems to rely on them outpacing last gen's 1st place system.