The dawning horror for the console vendors is that the change is already happening around them and on every iPhone, iPad, Samsung, Android, etc device. These already have digital-only distribution. These already have very high-quality GPU's that push almost as many triangles as an xBox 360 or PS3, and are on a faster product-iteration-cycle. Some of these - iPad3 and Samsung Galaxy Tab's - already have higher-resolution screens than your 60" HDTV and many people are using them more hours per day
You could argue a very similar point by replacing mobile devices with PC in your argument. But I console vendors don't look in horror in the PC market.
You are also missing a fairly big aspect of a game console, the games themselves.
many people are using them more hours per day and spending more dollars per device than they ever did on consoles
Do you have a reference for this? Sounds interesting, but I haven't seen the comparison before.
You could argue a very similar point by replacing mobile devices with PC in your argument. But I console vendors don't look in horror in the PC market.
You are also missing a fairly big aspect of a game console, the games themselves.
many people are using them more hours per day and spending more dollars per device than they ever did on consoles
Do you have a reference for this? Sounds interesting, but I haven't seen the comparison before.