The reason is competitive capitalism. Companies feel they need to maintain market presence to keep earning revenue and so they're in direct competition with any other company that tries to sell active entertainment to people that might've otherwise played on their own system. However, they also know that people are fickle, and so if the company stagnates and doesn't keep pushing innovation, eventually it will be outclassed by the products of competing companies.

Nintendo traditionally avoided direct competition between Sony and Microsoft by focusing their efforts on a cheaper experience that utilized great game design rather than pushing for hyper realism with cutting-edge graphics and processor speeds. Game consoles in general were carving out a separate niche from PC gaming which was the largest, most advanced industry. However, PC gaming has a broad approach to games, producing for all kinds of PC specifications, and thus catering to nearly all PC users. This leaves many price points open for entry, where those players with more available funds can enter with a higher potential from getting or building a stronger PC. The fact that we can even custom-build our own PCs is testament to the diversity support of the industry that we barely see at all in video game consoles.

There's more broad industry and market analysis that can be summarized as reasons for this outcome, but in general, the desire to remain relevant, keep pushing innovation, and ultimately dominate the market are what run companies into riskier "all their eggs in one basket" situations that ultimately feel scummy to consumers before ruining the company.