Two Kings

Now that the Xbox 360 and the PS3 are nearing the end of their cycles and soon to be replaced by the next generation, perhaps it's appropriate to look back at their biggest innovations, which incidentally were also their biggest failures.
In the beginning, there was little else to do on the 360 and the PS3 besides playing games. They both flaunted the next generation of home video, yet they chose rival formats. Sony put a Blu-Ray player into their system, back when Blu-ray players were otherwise expensive to buy on their own. In the eyes of some consumers, the PS3 became a somewhat reasonably priced Blu-ray player with a video game console attached to it. Microsoft chose the now extinct brand of HD DVD, which didn't come pre-installed with the system, but the hardware could be purchased at an additional cost, negating the early price difference between the two systems. Sony easily won this leg of the race, but flash-forward to today and try finding a Blockbuster. Nobody cares about Blu-ray anymore when there's Netflix, or computers. Discs are dead. Even physical video game stores are suffering and on the verge of collapsing.
That was the other odd thing about the two rivals was their "Elite" models that featured 250 GB hard drives. In the beginning, there was scarcely any use for these. The hard drive was necessary for downloading arcade games from their online marketplaces, but in the early days these games were little more than today's apps. There were even limits on the amount of MB these games could take up, meaning you were getting about 1/6th or less of the data a physical disc could take up. Theoretically, some people could upload their music collection onto the system as well, but at the time the biggest iPod held 80GB of data. It wasn't until the past couple of years that the market really opened up to 6 GB+ games and apps, and now 250 GB doesn't seem like enough.
Avatars evolved over the course of the two systems as well. The 360 issued cartoony looking avatars that served little purpose. They could be used in a small selection of games, as well as in your profile. The market for avatar items seems to have more selection than the indie game selection, and costs more. On the other side, the PS3 introduced HOME, which is like a pseudo Second Life using a personalized avatar. People seemed to largely ignore it's existence. Both these implementations trailed the also-ran Wii with their much less detailed, yet more iconic Miis.
The "motion control" push a few years back didn't do much. The Kinect seemed revolutionary... until it came out. People realized how clunky it was, if not outright annoying and useless. People went up in arms when they heard the upgraded Kinect was mandatory with the Xbox One, which should tell you how well it did. The games for the Kinect all seemed as though they were for little kids, and they were. Microsoft was absolutely committed to the Kinect, though, and remodeled the 360 interface around it. The most useful aspect of the Kinect seemed to be browsing the home menu if you were too lazy to find your controller. The price-point was high was as expensive as buying a Wii. The Move controllers for PS3 had the same fate as the Kinect. They were basically glowing microphone-shaped Wiimotes that could only be used on a handful of games aimed at kids. Unlike the stand-alone Kinect, you had to have multiple controllers for more people to play. Both entries seemed as if they were just trying to win over gamers from the Wii, which was largely collecting dust.
Before that, though, both systems had a camera attachment you could buy separately. The 360 had the Live Vision Camera, which could be used for capturing videos for apps and games. Same for the Playstation Eye, which never really caught on. These were both extra bells and whistles peripherals, and not part of the main line-up.
Strangely, the biggest failure for the 360 was the faceplate. On the original consoles, you could switch out and get custom faceplates, much like a case for a cellphone. It absolutely did not get off the ground. Few people probably ever realized it was even removable. They tried to create a secondary market that never came to be.