I am dumbfounded how anyone can think this would be "great" for the games industry. I am personally of the opinion that it would be absolutely terrible. Sure, there's a definite upside: no more console exclusivity, no more split userbases, arguably greater maxing out of the power of each console. But the downsides are massive.
The downside you're describing are anything massive, and the upside is more than making up for theses.
With the loss of competition, console features would stagnate. Think of all the great, innovative features we are getting this gen: wireless standard out-of-the-box, new motion sensing control schemes (e.g. Wii/Sixaxis), HD movie playback (PS3/360), AV capabilities (e.g. photos, music), online capabilities, custom soundtracks (360), etc. There are more, too; the list goes on and on.
This generation competition gave us more than that. We saw a player backing out completly from the
technological arms race bacause they
had to release a product on a timely manner because of the competition already did and they couldn't afford the expenditures attached with the latest technology; we also got a player who went way too far in that race causing its product to be an over engineered piece of machinery that underdelievered because of its retail price; we also witnessed an empowerment of some key publishers, who
thanks to the agressive competitions between the manufacturers got their ways and had the MSRP of games raised by 20%, as well as a virtual carte blanche when it comes to the manufactuerers quality assurance tests.
With regards to the question of technological features, why would one exclusively link theses with the fact that there are different consoles standard on the market? Did this environment forced Nintendo to release a console on par with the PS3 and X360? Did it get Nintendo to price the console on par with what its really worth? Did it get Sony to release a reasonably priced console?
New technological features are included in new designs because with time passing by, new technologies are created, and thanks to time again and the inherent economy of scale, they become affordable to include in your product. Also worth of note, some of these technological features, the software based ones, do not add to the BOM, they are an upfront R&D investment.
With that said, nobody said that having a console standard would mean the end of the competition on the hardware market.
Let's take an example, the DVD-Forum, a consortium comprised of CE manufacturers and movie studios, created a format: the well-known DVD. They set the product specifications and the rules the licensees have to abide by. But they don't dictate what extra features the retail product could have.
You can buy a plain, simplistic, DVD player, or a DVD/VHS VCR combo setbox, just like you can buy a TV with an integrated DVD player in it.
In other words, getting the advantages of a defined and common strandard and getting the advantages of a competition fighting for your hard earned cash are not mutually exclusive concepts.
In addition, with a single, dominant console, there's very little incentive to come out with a new console - unless you have a significant competitor breathing down your neck. For example, if there were no Wii or 360, how long do you think Sony would have milked the PS2? A long, long, long time - I mean, it's still doing great now even with all the next-gen offerings out there.
First thing I'd like to say is that I'm not certain that having a product, alone on the market, supported for a long period can be considered as something negative to the consumer. It might be a negative point for us, the folks I call the
graphic connoisseurs, but in the end it means that you get more life out of a product, just as the longer period on the market permit the product to reach a wider audience, on the basis that with the years, the cost of the hardware will reduce significantly, introducing more people to the media.
Now that was for the theory, in the facts, the next-generation will combine two things: a really nice example of the diminishing returns theory, and complex multi core machines that won't be close of being taped out anytime soon.
Theses two factors alone may make the idea of having the same machine of the market for more than 5 years, before any other products is released on the same market, a more bearable idea for everyone, graphic connoisseurs included.
Competition causes these console makers to try to innovate to differentiate themselves, then match each others features to achieve parity, and also to offer maximum value in their offerings to undercut each other. All of these are great wins for the consumer. The advantage of a unified userbase does not even come close to negating that. Would prefer to still be playing a PS2 on your HD set? Or how about playing all your games on $75 Nintendo-sanctioned cartridges? Just a few examples, of many, of what console competition has brought us...
Once again, you're talking about a close to monopolistic situation. With one company, creating a product, producing it, licensing the software running on it and controlling the distribution and prices.
That is different from having a consortium comprised of major player of the video gaming field, including the actual big manufacturers (without them it would just be another 3DO, costly, experience) coming with a mutual standard.
After reading these post of mine, you probably got to understand that I'm an obvious advocate for an unified standard for consoles.
A few years ago, during GDC 2005 or 2005, I think, J.Allard entertained the idea of a creating a hardware agnostic platform. It's an interesting idea, and fit quite well woith the Live Anywhere project, but it might be a bit too ambitious for the incoming years. A more likely scenario would be for MS to create a platform specification, basic hardware functions included, in commun with Sony and Nintendo.
Personally, I think if the Wii-experiment comes to fruition, in the long-run for Nintendo, the company might prefer keep doing its thing on its side. On the other hand, MS and Sony have some real incentive in doing so, they're competing for the same audience, they're producing the exact same machines, and they're bleeding way too much money and making way too little cash, if any, on this battle for this to worth it as it is.
A side note, though, if the Wii-experience, like I dubbed it, turns to be extremely profitable for Nintendo and allow them to earn a significant part of the market, if not the biggest part of the three, by the end of this generation, we might witness the competition going on, with one adjustment done: Sony and MS would withdraw from the technological race too. That way, fierce competition or not, the two companies will at least be able to make money, fast, on their product in lieu of taking long term bets like they do today. That potential success of the Wii would also lower, significantly, the barriers-to-entry of the console market and we might witness another low-cost player try its luck. Maybe that player would be a consortium of some CE giants and/or some big publishers which would prove to be a great moment of irony.
In any case, this purely speculative situation, but still a possibility, will see the competition going on, with all its downsides, and it won't give us much of its upsides anymore. A terrible scenario for the folks who like to have both great graphic capabilities and great game design.