In what way is the current system "fundamentally broken" ? They sold 609 million units last year just in games for the Wii, PS3, Xbox360, DS and 3DS. That's a lot of money for the industry. At the same time, I have tremendous choice as a consumer. Even just on the 360 there are a lot more good games than I have time to play. Add to that everything available for phones, pads, and the PC both in retail and electronic distribution and it is a great time to be a gamer.
If there are developers and publishers that are losing money because they spent a bunch of money on a crappy game, that isn't the fault of the used game market. People have been predicting for decades that the tremendous and rising cost of producing and promoting blockbuster movies was too high and that studios would fail and fewer movies would be made, but I see no evidence that there are fewer movies available.
If console makers go through with their plan to kill the used market, it might make them more money, or it might convince consumers to spend that $15-30 they would have spent on a used console game on some other platform. Or they may not be as willing to pay the $60 for the new game if they know they can't sell it for $30 when they are done with it, so, again, they may choose to buy a $5 app. that keeps them entertained for a week.
It is a huge decision for console makers, with big effects, but let us not pretend they are fixing anything.