It just occurred to me a new, better theory as to why console games are suffering, rather than explaining why mobile devices killing them is ridiculous.
Two things~
One, the 3DS is coming out. The DS has always been the most popular "non-PC" gaming system in the world, as long as I can remember. Like TJGamer said, that means diverted attention.
Two, consoles /used/ to rely on releasing new systems fairly often. However, due to the advent of online gaming and consoles trying to compete with their immortal grandfather, the PC, this has changed. It's very clear, at least to me, that consoles are trying to live longer than they used to.
In the past, consoles have had a tendency to upgrade every 5 years or so. The PS1 upgraded to the PS2 after about 5 years. The SNES upgraded to the N64 after about 5 years, the N64 upgraded to the Gamecube after about 5 years, the Gamecube upgraded to the Wii after about 5 years. The Xbox upgraded to the 360 in around 4 years, and the PS2 upgraded to the PS3 in around 6 years, which is pretty close.
Y'know how old the 360 is right now? Approximately 5.3 years. The PS3 and Wii are slightly younger. Yet... even Microsoft has stated that it wants the 360 to last until say, 2015.
That's like ten years total we're talking. That has /never/ been done before on anything except a PC. Let me explain why a PC can do this, and why it's not easy for a console.
Probably the most important two things a console does not have, is upgrade-ability, and mods. both of these things can extend a gaming platform's lifespan indefinitely. They're pretty much the core reason PC has been around and will probably continue to be around forever as a gaming platform. Mods alone could add years to a console's lifespan simply by drastically increasing the lifespan of it's games. On consoles, especially the PS3 and 360, modding is extremely limited in comparison. The Wii, actually has a fairly big modding community. It's modding community is /incredible/ for a console. If you've ever seen one of the many Brawl mods out there you'll know what I'm talking about. On the other hand, I can name 10 year old games on the PC with a /bigger/ modding community with /easier to use mods/, because hacking the Wii to use mods in the first place is pretty painful for your average gamer.
The point of all this, the real reason consoles are suffering is because A. The DS is using a better formula that works to make up for the consoles weaknesses, and B. because all three console's respective companies seem to have forgotten an integral weakness they've been covering for decades by releasing new consoles every so often. The result of this is that it will seem more and more like consoles are dying until /somebody/...probably Nintendo, releases a new console.
(Don't ask me why I said probably Nintendo. It's just a guess based on Nintendo's behavior revolving around the DS and the fact that Microsoft openly implied they weren't making a new console anytime soon.)
