This question was asked in 2011. It is now 2021 and the answer is definitely not – and almost certainly not in the next ten years. But consoles very much are changing their place in the market and likely to end up as a pure luxury good for Gen X and Millennials with limited Zoomer interest.
In the 2000s and early 2010s a console was a home entertainment center that plugged in to your TV – and the PS2 got a huge market share just by being a cheap DVD player – while the PS3/360/Wii generation not only played DVDs but Netflix etc., effectively turning your TV into a smart TV.
However in 2021 almost all new TVs are smart TVs, many of which can play games in their own right. And everyone carries a computer gaming device in their pocket. You don’t need a console to play video games at all.
However the market says that the going rate for a smartphone game is about $5 – or microtransactions. Very few companies can make a Genshin Impact or other large deep and immersive game with good graphics and lots of lore and pay for it in $5 chunks or even with a lot of players paying absolutely nothing. The market in China is just about big enough to do that by volume occasionally. But in general it isn’t.
However. If you are willing to pay $500 (or whatever) for a console you are showing that you have hundreds of dollars you are willing to spend on gaming so you are worth making expensive things for. You are also saying you like to game probably on a couch in front of a large TV. Consoles aren’t going obsolete in the foreseeable future – but rather than being the cheap way into gaming they were in the 80s, 90s, and even 00s they are paying a premium for a VIP pass to gaming and are a pure luxury good.