Without consoles AAA gaming would die and the cycle of better graphics would stop.
Consoles hold back PCs as much as PCs hold back themselves. Looking at the steam hw survey, the majority of steam users have machines worse or comparable to consoles. If someone made a $50 million AAA game taking the Titan X as a baseline, he would go bankrupt.
You can ask yourself, if consoles were holding back pc's, then why doesn't the average PC exclusive look significantly better? "it's because they don't have big budgets" and then you come back to what CDPR was saying: W3 was made thanks to consoles.
So essentially, it's thanks to consoles games are bigger and look better.
This is the correct.
Some are really missing the point here, just because you can scale down a game to make it playable on lower-end PCs doesn't mean they are not holding games back. Just imagine how a game would look / what stuff it would pull off it PCs with Titans or whatever were set as the MINIMUM requirement.
But that's ok! It's about selling copies of the game (i.e. more people being able to enjoy your game) and not about catering to some small exclusive club (arguably the last time that happened was maybe Crysis to pimp their engine?).
Consoles just give a rough target to develop for as that's the hardware most have.
And from
http://store.steampowered.com/hwsurvey?platform=pc
You can basically see that there are peaks for low, mid range and high range systems:
(comparisons with PS4 hardware are just an estimate, don't lynch me for it)
CPU:
48% 2 cores
44% 4 cores (=PS4)
7% around 1.7 Ghz (=PS4)
38% around 2.3 Ghz
30% around 3.3 Ghz
RAM:
35% around 4 GB RAM
33% around 8 GB RAM (=PS4)
13% 12+ GB
GPU:
Most people have DX10/11 cards, but people more in the know than me can look if there's some kind of distribution, I will just list the cards with the highest percentages:
14% around a Intel HD Graphics 4000 (<PS4)
9% around a NVIDIA GeForce GTX 760 (=PS4)
9% around a NVIDIA GeForce GTX 660 (<PS4)
8% around a NVIDIA GeForce GTX 970 (>PS4)
14% around 0.5 GB VRAM
35% around 1 GB VRAM
28% around 2 GB VRAM
8% around 4 GB VRAM
(N/A on PS4, uses the system GDDR5 RAM)
Display resolution:
39% around 720p
37% around 1080p (=PS4)
Obviously the low end is provided mostly by cheap laptops etc and skews these surveys as those people/machines are probably not a target of AAA games.
But even ignoring the low end range, most people still have a PC that is comparable to a PS4. The main difference is that on PC most people have a CPU that is more powerful than the PS4's.
The extreme enthusiasts ("PC master race") playing their games in 4K don't really show up in these stats apart from maybe some of the high ranking GPUs.