N64/PS1/Saturn: 146 million units sold worldwide
GC/PS2/Dreamcast/Xbox: 214
Wii/PS3/Xbox 360: 275
WiiU/Switch/PS4/Xbox One: 338
Switch 2/PS5/Xbox Series: 150
So since only the last generation has lower number of units sold, it seems to me that the market for console is either only recently declining, or the cycle is much longer and people takes more time to buy the new generation.
I'd also observe, vice versa, that after Nintendo jumped on the bandwagon of charging players to use their own internet connection that their sales started declining significantly. I don't know if it's causal; even people who chose to opt out themselves might not even really know. What I mean is that this feeling of getting nickeled and dimed is going to imperil fun in some impossible to quantify fashion, and if these various actions hit another completely unquantifiable breaking point, then you start losing players in yet another unquantifiable way - until suddenly you notice that people just don't seem to want what you're offering anymore.
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EDIT: And I had a chuckle seeing a topic just posted: "Disney Raising Prices Days After Confirming Ads Will Now Show Up on Every Tier" [1]
One aspect that springs to mind immediately looking at that timeline is the rise of mobile, it wouldn't have happened immediately at launch (around 2007) but has been a building wave that meant practically everyone has a games device in their pocket. For audiences of certain genres is all they need where they might have contributed to the overall picture of dedicated gaming devices, leaving other gamers and companies to balance the books for other genres that are left.
'Shareholder value' is another problem. Shareholders, in general, do not hold shares of companies because they want those companies to succeed, but because they expect returns from those companies. If they can get a 50% return and then have the company die in a fiery blaze, most shareholders would be perfectly fine with that so long as they were reasonably confident that they wouldn't, themselves, get burnt. So you have shareholders with no interest in the long-term similarly aligned with executives who have no interest in the long-run.
There's also probably more technical issues like discounting earnings over time. A penny earned today is generally considered significantly more valuable than a penny earned tomorrow by companies due to inflation, opportunity cost, and other such issues. So even if you think the long-term is relevant, the expected earnings cost would have to be dramatic to make it comparable to the impact of next quarter.