Honestly I think the VR indsutry innovation will be driven more by the "adult entertainment" industry than the video game industry initially.
Even if the big three die out (which is unlikely), I'd be willing to bet many other smaller companies release things. Look how many companies released systems back in the 80s.
Maybe its time for video game makers to go back to figuring out what made games fun, instead of rehashing the same thing over and over again. I'd say 98% of my Xbox games sit on the shelf forever after I play through them once. However I can pick up PunchOut or Contra, or any Mario (NES) game and play it and have fun. Modern games don't have the re-playability that classic games did. This is why I think they have lost something, and perhaps something they need to sort out to stay alive.
The only real warning sign I see is new games (big titles) are still be released on previous generation consoles, which to me would seem to indicate adoption rates are not as high as the big three would like.
Really I think saying consoles will die out is like saying this will be the year of the Linux desktop. Sure us geeks would like for it to happen, but its not likely.
Quite frankly I've gone to almost strictly consoles, as least those don't require an internet connection to a DRM server. Ive never even cashed in any of the free game coupons that came with my last video card for this reason.