Bogging down the development of a minority of highly sophisticated and/or technically demanding games, like advanced racing simulators or your typical overwrought glorified interactive movie, that is. A fair point for simulators, but not a whole lot of other games.Why? Easy... the improvements in console land are happening in too small increments and are bogging down the development of games. At least what I understood from Ian through his tweets.
I've been enjoying a variety of innovative, creative, fun experiences on the Switch that prove that gaming is thriving perfectly well without the need for a console even as powerful as the base PS4/XBone. The rise of indies was the best thing to happen to gaming this past decade, and the Japanese studios are back in their groove as well.
If more developers did more with the power available, like a TLoZ: Breath of the Wild on steroids with cool uses of physics processing and other new gameplay possibilities, instead of whatever the hell the point was for all that exhaustive detail in Red Dead Redemption 2, for example, then I'd be more on board with having more powerful hardware.
Hardware is pointless without games to support it. That goes for both gameplay sophistication and this SMS console.