Consoles - Bad for Development?

Here's an interesting quote I found over at Idle Thumbs:

With the introduction of next-generation consoles such as the Xbox 2 and PS3, software design houses will be required to put more manpower and capital into developing new games to cope with demand. So I think that there will be no room for small-scale design houses to survive in the software market for these consoles.
-Hisao Oguchi, Sega Chief

I see this as leading to an increase (if that's possible) of licenses and sequels for the consoles and the PC could be a hotbed of innovation. All the small studios will be forced to develop for the PC only and will likely need to be very original in order to succeed.