My personal take on Iwata's comments regarding today's consoles reaching their limits was toward gameplay. In a broad brush generalization he is correct in his statement. What many gamers have been complaining about this generation, at least in regardes to Nintendo, is the lack of innovation to their games. In that sense, it is true that we have seen more rehashes with the GameCube than with the N64. This is indicated by sales and the overall lack of hype.
Aside from Wind Waker and Metroid Prime, can anybody really say that Nintendo's games have branched out and done something truly unique relative to past iterations of said franchise? Not really. Not even Wind Waker was leaps and bounds different from Ocarina of Time. Likewise, the Wind Waker's sequel will be using the same game engine and probably won't offer a totally unique experience.
This 'rehash' generation was especially prevelant with Super Mario Sunshine - and the infamous debate that was spurred over the disappointment in the game's lack of innovation. The gameplay mechanics were mostly identical to Super Mario 64. The primary difference being the water pump and enhancements was frequently referred to as "the gimmick" despite the profound effect it had on gameplay and level design, which in itself was a unique experience for a Mario game. Conglomerating those thoughts and feelings, Super Mario Sunshine really did look and feel like an enhanced Mario 64 - there is no denying that.
What we see all across the industry is a wealth of rehashes and updates. This is more true in the sports genre than anywhere else, and to further iterate this point there are no other games that sell more than the sports franchises. Not even Final Fantasy sells more than the wealth of yearly updates on the #1 sports titles. With this in mind, there is a danger that resides in the current model of sports games because they don't appear to have a great deal of direction to head in regarding change. They're already in 3D. Where else do you go with such sophisticated and detailed polygon models. They can continue to become more life-like, but that's purely a graphics issue and not a gameplay topic. In terms of gameplay, they can't really offer anything new or exciting.
I have suggested many times that the side-scrolling games should find their place on the consoles (we already saw some of this in Viewtiful Joe), but that in itself is simply rehashing old ground too. Some freshness and variety is needed, though, or the industry will get stale as a whole.
In previous statements, if any of you will recall, Iwata has mentioned more than once his feeling toward the industry and the concern over a collapse. I maybe misquoting or providing misinformation, but this is not a detail I think I would confuse, so correct or support me in my claim to verify this. With his recent statement to the newspaper that printed the story, in light of his feelings about the gaming industry reaching its "limit" and the possibility of a market fall, I would expect something to enhance gameplay. With Nintendo's recent experiments in the realm of multiplayer, it wouldn't be a far reach to see them implementing their own ideas for multiplayer experience that fall outside of the internet. If it's going to be a console enhancement, one can only imagine what they have in mind. If it's massive multiplayer it will have to be more cost effective than internet connection. Anything else will have to have mainstream effects to escape 'gimmick' status. Donkey Konga already uses drums for example.
If it's not a graphical enhancement, one has only so many areas to explore in gameplay. I can't help but feel multiplayer can and should play a role at least in terms of how we interact with our gaming buddies. At the same time, what's there in multiplayer that hasn't been/isn't being/won't be exploited in the present or near future? My pondering ramblings can go no further than anyone else's.
They do need to make this a significant piece of hardware. If it doesn't reach mainstream, it'll be a failure in more than one way, in my opinion. If it's a big gimmick, I can't lie... I'll steadily lose my faith in their credibility for pulling stunts like this. I still think the world of Nintendo, but it seems like no one hypes their gimmicks like Nintendo does.