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It is, that's why the new consoles highlighted their non-gaming features. You can't just sell people game systems anymore, you have to provide an entire entertainment package.

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I don't think those two facts are particularly related. I'm a hardcore gamer but I wouldn't buy a console if it didn't have interesting entertainment features (and great game line-up) or I'd just stick to PC. The growth of Steam and popularity of game emulation (which I'd wager is higher than ever) probably show that the hardcore market isn't going anywhere. You could probably compile Humble Bundle data too.

Again, I don't have hard data, but the situation doesn't seem as bad as some may think.

You're basing it off your experiences as a hardcore game interacting with hardcore gamers. The amount of people that wouldn't describe themselves as gamers that have emulated older games is a number at best in the quadruple digits. That isn't a big enough base to make money. If you want to make money you target the masses. The masses don't care about their parents video game characters.

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