It still is, just increasingly less so on consoles. You'll notice that many of the generation's biggest breakout hit franchises (Off the top of my head: Farmville, Call of Duty, Wii Sports, Nintendogs, Wii Fit, Angry Birds, World of Warcraft, Minecraft) were not on HD consoles at all.
So I think it can happen, but it's increasingly likely to happen on PC or iOS or Android or other portable devices. If you specifically want this sort of break out hit on consoles, well, I don't know what to tell you. I can say it's not impossible, and there will be at least some successes early in next generation. It isn't like this is a sudden thing where all innovation just stops; it's been a consistent downward arc that hasn't reached 0 yet and almost certainly never will.