If it was the only reasonable decision to make, why didn't anybody make it? There's no such things as a console that does "just games" any more, they all include a web browser, netflix, music and video on demand and all other kinds of services.
There's a difference between consoles that were made as pure gaming consoles with multimedia functions, & consoles that were made as multimedia devices that also plays games.
Original Xbox, Xbox 360, Wii U, & PS4 are the former. PS3 & Xbox One are the latter.
I can't find the link anymore, but an article from around 2001 detailed why Microsoft made the Xbox, they basically were under the impression that living room computing was going to threaten their Windows empire, when in reality it was mobile that was that threat. How they missed that is insane to me, but they're probably feeling the sting now that Apple caught that first and are having the most profitable quarters of any company in history.
The best thing they gained out of this was the brand, because they're sure as fuck aren't going to make anything worthwhile from just gaming.
They also let Valve take over the PC market with Steam & gained a strong foothold. And all because they feared that Sony would take over the living room.
Look at how well that worked out for them.