For all we know a lot of casual gamers did "graduate"... and then bought a PS4 instead of a Wii U.
Maybe, inasmuch as they were kids with a Wii in the house (or had a DS), got interested in videogames, wanted mainstreamy/"core" stuff, picked up PS4s when they had the chance as adults. But the DS sold 150 Million units, the Wii 100 million. There's no way in hell anything now, even PS4 and WiiU and Vita and XBone combined, will touch that kind of penetration. The PS4 is selling well, but even Sony is confused about why it's succeeding as much as it is. I think it's because there's a pretty rigid audience of 20-40 year olds (majority male) who grew up with video game consoles, playing console-type games, and now have disposable income to drop on new systems and a weirdly ingrained cultural identification with this specific formulation of the medium (more so than there were at the outset of the PS360 gen).
Anyway, my point is I think the console space is set to become a large but calcified niche, which will attract less and less business enthusiasm given corporate growth priorities. Kids growing up now on tablets and phones aren't going to care about the console space in the same way. If anything Nintendo did great work in easing the "casual" audience into motion-controlled interactive media with the DS and Wii, only for them to inevitably turn to smart phones. I guess in summary I suspect the long-term history of video games is going to look at consoles and what we think of as "real" games as interesting dodos, unequipped to survive contact with invaders from the blue ocean.
I disagree with everything you said. Consoles have always existed as a niche of the larger market, have you never heard of Arcades, that is the market mobile replaced not consoles. PS4 is not only going to sell well it is going to blow past Wii and DS sales numbers before this generation is done. Maybe the reason PS4 is selling so well is it does everything right and hasn't compromised on anything. The games will just naturally gravitate to it and eventually the sales will continue to rise.
Even if you take blue ocean out of it, the console space as a whole has not changed much in terms of raw numbers, if anything its growing not declining.
PS2+Xbox+GC sold a combined number roughly 196 million total. Last gen sold a combined total of roughly 340 million and counting. That is *just* consoles not counting handhelds and so far PS4 has blown past Dreamcast, Game Cube, and original Xbox lifetime sales. Well they maybe have another month to go for that last one but they will surely do better than PS3 did which is sitting around 80+ million and counting as of right now. Hell PS3 still has a chance to top Wii life time sales if it keeps selling, which doesn't look like Sony wants to kill it any time soon. Playstation consoles are famous for their incredibly long life spans, Nintendo consoles are not so much.
Steam Machine is gearing up to expand the console space as well as it will combine PC and console into one unit, something Xbox and Playstation have been sort of attempting for years. Society as a whole might be gravitating towards mobile in large numbers but as the worlds population increases so does the gaming population. Its not like in the 90's where gaming was a niche today it is pretty mainstream and consoles do a LOT more than play video games, well unless you stick ONLY to Nintendo consoles and then they barely do more than just video games and well sometimes they barely do video games.