Simply put, a new market can accommodate several players, but an established market tends to converge on two players (i.e. a "duopoly"). This is basic economics. In the early 1980s, the console market was still very immature and we had several players. But that changed very soon.

What you have observed is a very fundamental arc in nearly all consumer technologies. Gaming consoles, mobile phones, browsers and computers have all gone through this evolution cycle. I've tried to illustrate this below:

• Stage 1: The pioneer innovates and creates a new market (e.g.: Atari console, Nokia mobile phone, IBM PC, Netscape browser)
• Stage 2: Soon other competitors jump in and attempt to differentiate by making improvements (Sega console, NES, LG phone, DOS-based PCs, IE browser)
• Stage 3: the technical standards and features eventually "stabilize" (it is no longer possible to innovate faster than the market leader) and the market can no longer sustain so many players. Eventually, the company with most capital and the strongest distribution chain wins. (This stage destroyed computer companies like DEC, Wang etc and Netscape, Sun Microsystems)
• Stage 4: Technology landscape changes and Stage 1 occurs (Apple iPhone and Android, Xbox and PS, cloud computing) all over again.