Yeah, this has happened a few times over the years to a few different video game giants, and I always personally refer to it as "Big Head Syndrome". LOL
My first sight of it happened when Atari was manufacturing more game carts than there where systems to play said games on, which in turn led to the market crash of the early 80's. While they where enjoying massive success, they also didn't feel the need to properly compensate staff, which led to 3rd parties, which in turn made for game creators to work any place and for anyone, and get their own due credit for games they made(and compensation).
Next in line for BHS was my personal favorite, you guessed it, "N". This is also the only company to be on my list twice, with Sony possibly being the next in line for that this high honor. After 2 gens of massive success with the NES & SNES, "N" led by Yamaguchi really just thought they owned the industry and could do what they wanted, and all the successful 3 parties would follow...........wrong, WRONG! I'll keep this short, but CD was wanted by most, "N" didn't want to use it, and the rest, is well history.
Next of course was Sony, and after PS1 & PS2 they got BHS, and off we go. PS3 was a hot mess of we can charge anything, and consumers will pay........Wrong, WRONG! I will say Sony does get some credit for fighting back that gen, as they saw their own folly, and corrected the ship, to end in a pretty good space after having the 360 be so strong for so long. At the PS3 release, I did see the value, as Blu-Ray players where much more expensive and didn't offer gaming, so I understood the idea, but most consumers did not. No one really needed or wanted blu-Ray as it was new, and while they wanted a PS3, they didn't want the extra cost.
Then of course we have "N" part deux. The Wii while an amazing comeback story, was pretty much a last effort by a company who had lost all the good wills it once had in the industry(at least for it's consoles). The Wii cut R&D cost in half, maybe more, as it was the past gen console re-purposed, due to no longer having the cash flow of old. Why risk funds on a new system, when if it performs like the N64 & GC, it would have been disaster mode. Then of course we all know what happened next, the Wii was one of the most successful consoles of all time, which led again to BHS, and the Wii U. A beyond half baked idea that even "N" had no idea on what to do with, and just thought putting "Wii" on the box would lead to massive sales.......wrong, WRONG!
Then we have the PS4, I really haven't followed this system much, as I don't own one, but I can easily see how Sony has dominated this gen, and that alone tells me they are ripe & ready for their second round of BHS as well. I've been enjoying the conversations here as well, as both sides have made valid arguments. I personally see all 3 players as competition to one another, and I also don't think MS will leave gaming, as it just seems like something they "want" to do, and they have the resources to continue if it's money making or not.