The graphics themselves are not always the issue. They are the cause of the issues. Good graphics have one problem inherent to them: They become outdated. As you said, those graphics cause power (and price) of hardware to increase while removing the things that make games great. Give me good graphics but not at the expense of the things that make games timeless. Graphics will look dated, gameplay is forever.
I'd argue that it's not just that they become outdated, but just how many resources need to be diverted to the graphics when working on high-fidelity games.
When playing through a game with demanding graphics I sometimes stop in a random room and contemplate just how many man-hours it has taken the developers to design the room, the props, the textures, lighting et al, and all for an environment the player will likely spend a scant few seconds in. And the problem is that it must look convincing because it would ruin the experience otherwise.
It's why, just like you said, highly stylized graphics always win in the end. Megaman Legends looks as timeless today as it looked when it released, Jagged Alliance 2 will look just as good in another 20 years, but we'll look back to the likes of TLOU2 and wonder why anyone ever bothered to praise its for their graphics.
And not just that, but with stylized, lo-fi graphics you can iterate on things faster. A character doesn't mesh well with the rest of the cast? Creating a new one is going to be very fast, compared to a modern game where they need to call in another actor, go through the whole bodyscanning, have him mocap the animations (because that's apparently something they insist on doing now), plus all the other insane tech that goes into implementing a new model - from simulating musculature, to body textures, lighting, hair, and all needing to be QA in minute detail to make sure they missed nothing.
Now apply the same kind of logic to every single other asset in the game.
Same thing, in general, applies to cutscenes. What was once considered bleeding-edge CGI, like those in Final Fantasy VII or Starcraft, nowadays look very silly and outdated, while the 2D animated cutscenes of Myth will always look good (barring the dogshit compression they were shipped with).
Exactly, though I will argue that Nintendo's long term strategy was always the more evergreen. Nintendo wants to make good, innovative games at a low cost. They don't follow that strategy as closely as they used to but it is still there at a diminished effect.
Nintendo also didn't obliterate their internal/first-party development teams, or first-party developers, like Sony did.
They've still managed to retain the institutional knowledge and experience necessary to make solid games. Not everything they make is a banger, but the number of in-house Nintendo games that turn out to be duds is small, and you can usually trust that the game you purchase will at worst be competent.
Microsoft's strategy was non-existent, at least long term. Each console generation had its own half-assed, poorly implemented strategy. Xbox: easy to port PC games. 360: really cheap hardware. One: TV, TV, TV, TV, Kinect. Series: buy studios and hope games spontaneously manifest because otherwise the Xbox brand is fucked. Also Game Pass (which destroys the idea of sales).
Pretty much, yeah. They never seemed to have a good idea on what to do, and each new console generation they seemed to forget the lessons from the previous one.
The Xbox One is also where the brand pretty much died. Once people began to switch to digital purchases, they were basically locked-in to that platform, since starting over would have been very expensive and painful.
