HD and almost everything you believe about hardware is wrong.
Frankly, if you're going to blame graphics hardware, you should be blaming John Carmack, his failure of a tech demo company, and the gaming media who swears by the latest highest poly 3D engine because they want to relive the glory days of quake deathmatches in highschool. Not the hardware devs.
That's if you blame HD, which you shouldn't. The hardware devs are to blame, but it has nothing to do with HD. The current console war isn't one caused by corded console HD graphics wars, it's one caused by releasing too many handheld devices too soon, because the handheld devices actually compete against the corded consoles and have since the GBA said "Hey, look, remember the SNES that you loved so much? Here it is again, but you can take it with you!"
And then you could take the PS1 with you. And then the N64. And then the gamecube. And then the PS2 and a half. The handhelds kept comin' long before developers ever ran out of things to do on the hardware.
Quite frankly, with over ten consoles to choose from, consumers are so split that when a company drops $130+ million into attempting a triple A title, and that triple A title fails to achieve solvency nine times out of ten because they had to port it to four out of ten consoles?
The industry is not Nintendo vs Sony vs Microsoft vs PC.
It's Wii vs DS vs 3DS vs PS3 vs PSP vs PSV vs 360 vs PC vs Flash vs HTML5 vs iOS vs Android in a steel octagon free for all.
When the WiiU and Ouya come out, it will add those two to the list. The WiiU will NOT replace the Wii. They will compete with each other.
When you're looking at an atari era style free for all, that's when you need some successful SAAS products to bankroll your publishing company so you can afford to eat failures like that. Because without it we would have had an atari style industry crash five years ago. One successful SAAS product like WoW, Farmville, etc. can bring in enough money to bankroll twenty attempts at a successful triple A titles.
There's nothing wrong with SAAS by itself. The mistaken belief that it's a sole dependency is a problem, but the console companies seriously need to say "Hold on, hold on, hold on, we need to downsize" and start dropping support and licensing for some of the consoles.
And then there's the used games industry. God, if there was ever an industry that needed to die to prevent product cannibalization, used games is it.
Triple A gaming needs to stop as well, but that's an idiot publisher belief we're not getting rid of any time soon. I'll settle for getting the industry to downsize it's handheld mess.