Alright, I was hoping to avoid a long post cause I get confused when writing them. I do know a few things about video games and the industry so this is my theory.
With less consumer spending on anything but neccessities video games will have to fight to stay relevant. Video game consoles will either have to lower their prices drastically or go extinct. This may lead to a winner go the spoils contest or one video game console that tries to combine all three.
What's more likely to happen is an underground is more likely to form and emulation will get bigger with many old consoles and games getting revived attention because they're cheap. Handhelds may rise from their secondary positions because most people won't have the time to stay in one place to play games for hours.
Online and party games will become the behemoth of the industry as something everyone can play will be what will sale though this depends on internet access being cheap. We won't be seeing many new releases from the mainstream thanks to cost concerns; the underground and independents will lead in making new original games.
Video game development will have to become more streamlined and have to show tangible results that it can be a hit before publishers will invest as one bad game can now sink a company. This leads to less innovation until the 1T comes around because with a combined streamlined video game industry and the underground developers now in positions of power or as recognizable companies will allow the video game industry to push itself in new directions.
So video games will survive the 4T but don't expect anything fantastic until the next 1T when independent and underground milles take over.
Oh, yeah Ricecar71 I wouldn't know about the Wii because I don't have one but it sounds great.