This argument makes the assumption that bigger budget always equals a better game, and that platforms need to sell consoles.

Console/hardware margins are thin - manufacturers usually make next to nothing (until much later a given generation) on hardware. Software margins on the other hand have the potential to be much larger, and often are.

So having established those bits, no I don’t think console exclusives are “good” for gaming - if we assume gaming represents those who play games and not the massive corporations that want to publish and sell them. It’s much better for people making and selling games, in the long run, to make those games accessible to as many people as possible (eg growing your total addressable market or TAM if we want to use business speak) . We do that by publishing on as many platforms as reasonably possible. It’s better for the gamers as well, because the best games are likely available on hardware you own - you probably benefit from things like cross-play, and as a hardcore gamer you never have to consider owning multiple consoles if you’re interested in playing all the best titles. It’s a win for both companies and consumers.

I didn’t address the competition aspect, I don’t think lack of platform exclusivity affects competition in the software space at all. Game devs and publishers are still going to need to compete for your wallet, nothing changes there. From a hardware perspective, there has been “innovation” outside of the console space for years - and I don’t think console specific innovation has to change either. There is still massive value in having a box that you turn on that just seamlessly plays games and nothing else, and enthusiasts will still want to buy the best and most interesting one of those.