I think dividing the market by the terms "HD" and "SD" is oversimplifying; as noted above, a good chunk of PS360 owners play their games in SD. However, the difference in graphics/experience/games between the PC vs PS360 vs Wii goes deeper than resolution. The PS3 and 360 share about 90% of their lineups. A more accurate assessment would be, consoles that have "real" versions of CoD, BF, AC, RE, GTA, Madden, FIFA, NBA 2k, and RDR have proven more popular than Nintendo's offerings since 2009 or so. As most of these games are differentiated from the Wii generation of games by graphics and online features, it's easy to make a delineating line of where the market is segmented.
It's hard to predict how the next generation will pan out with there still being 3 players. The Xbox's extra horsepower was largely ignored because the PS2 was a runaway leader. The Wii was largely ignored because developers had already invested in PS3 and 360 development before it even launched. Nintendo is getting their foot in the door first, and will actually be helped a bit by strong support for the PS360 in 2012/2013 (why not do a WiiU version?). Beyond that, it could go several ways depending on how hw rumors shake out:
- Sony goes with a more conservative design, convincing most developers to ignore the 720s alleged power advantage and design games for PS4/WiiU
- Sony and MS both go all out, convincing most developers to leave Wii U behind
- Sony and MS both go with modest designs, giving us a 3-headed situation like GCN/PS2/Xbox
- Sony and MS both go all out, it guts developers left and right, and they go back to making PS360 and Wii U games for the next 5 years
- Wii U explodes out of the gate, everyone else gets Dreamcasted, Nintendo prints money