Nah it's more than that, a lot of 3rd party publishers did the same thing when the N64 was trailing, XBOX, Dreamcast, etc. After awhile it stops making sense to put out games for a system when the profit margin is so small. PS3 is dead last as I said, so the user installed base is smaller than Wii and 360.
You can't compare the PS3 to the N64. Publishers couldn't make the same QUALITY games on N64 and PSX. Cartridges were more expensive to make than CDs. There were a bunch of reasons that the N64 failed. Nintendo has a problem with limiting themselves. Not that they really have much of a problem now.
They're taking their problems all the way to the bank.
You might be able to compare the PS3 to Dreamcast. . . but, I believe Sega of Japan kinda pulled the rug out from under themselves on that one, more than publishers jumped ship. Sega had had problems for a while before Dreamcast.
Same thing with X-Box, Microsoft pulled the plug on it themselves when they started developing the 360, that's probably what signaled publishers to stop developing X-Box games.
Honestly, this whole gen is completely F'd up. . . I mean, the freakin' Wii is the best selling console right now?!?!? That's complete BS, that system has nothing but shovelware. When was the last time the Wii had a "system seller" in the vein of Halo, MGS, Killzone or whatever?? I guess Punch-Out qualifies, but it's not really in the same league. I figure it's Smash Bros, which came out over a year ago. . . freakin ridiculous.
360 is trying to push this "more than games" thing, with Netflix and all this other online extraneous stuff going on, almost more of a social networking device, rather than a games machine. Sony's making games. Sorry, but I want to play videogames. . .with a controller. . .I don't want to swing my arms around, and if I want to get healthy I'll go run a mile, and if I want to chat with my friends, I'll call them on the phone. I don't need to look them up on my video game machine.