Console sales might be healthy, I'll concede that (even though I'm not sure current gen doing better than the beginning of the previous one is necessarily a definitive proof, considering the utter disaster that was 599$ PS3)
But console-related industry, as a whole? Let's discuss, with the post of NPD's Matt in mind. Less (AAA) games is hardly a good sign IMHO.
It's not that they might be healthy; they're healthy. And we're far from the beginning of the generation; we're almost four years into it, and consoles continue to outpace their predecessors. Many were dismissing the incredible late 2013/early 2014 sales as simply demand for new hardware, and then they hid when sales continued to do well because they couldn't admit that was a completely false analysis.
Less AAA games that last longer doesn't seem any worse or better; it's just different. AAA games are expensive, and either you raise prices on all of them, or you make them last longer. That also means budget-conscious games like Knack 2, Everybody's Golf and Matterfall have an opening.
There is no 'norm'.
Every generation has been huge growth until this one. And WU/XO/PS4 is unlikely to even reach PS2/XB/GC/DC either.
Have you see the numbers for the Xbox/GC? PS4 is outselling the PS2 day-to-date, and the Xbox One is easily outpacing the Xbox. GC and DC barely sold anything, and why would we exclude the Switch from this conversation?
Falling back to ~2001 levels when the worlds population has grown by almost a billion people during that period, and most other entertainment industries have also grown during that period still doesn't look good
e:
To be clear - "gaming" is still growing. "Console gaming" a.k.a. "real gaming" is not.
Almost all of the growth is happening outside of the console space. Feel free to invent your own criteria for success to prove that everythings fine in the console space and things will definitely continue as they are forever.
This fundamentally gets one big entertainment industry wrong: movies. The movie business is a huge entertainment business that makes more money even though they sell
less tickets.
Also, I wouldn't say anyone is saying things will continue forever. Arcades were bigger in the 1980s, PCs had a totally different library than consoles in the 80s and 90s, consoles have become all-in-one boxes, etc. In 100 years, gaming, movies, music, etc., will all look completely different than they do right now.
I don't get the "real gaming" convention, either. Definitely, AAA games are a thing on consoles/PC only, but what makes Tetris more of a "real" game than Candy Crush?