Yes, but Nintendo did absorb the Game Freak staff and did attempt a revival with the Pokemon World MMORPG to some success a few years ago. The Pokemon craze was a flash in the pan for sure but it had some serious competition from Digimon on all fronts from the video games to the animated shows to the card games. Most of the characters from the Pokemon anime (especially the protagonist Ash Ketchum) were flat and static, the main cast of Digimon experienced considerable character growth by the end of the season. The fact that Ryo Akiyama, the main protagonist from the games, became a regular character in the second season helped too. Granted, Digimon sputtered out by its fourth season, the animated series is more fondly remembered than Pokemon's.
In the end I believe that Pokemon 3: Ruby and Emerald failed because it felt like one step forward two steps back for the series. They removed much of what made Gold and Silver a leap ahead of Red and Green. The day/night cycle ate up the battery backup, which made the games useless in four years (give or take), so Game Freak had to remove it in the end. Another reason is that I do not think Pokemon survived because the technology to take the series to the next level was just not quite there yet. Imagine what Pokemon could have been if the Game Boy Advance had Wi-Fi and online capabilities. Maybe we would be playing Pokemon 4 (or 5): Black and White instead of Digimon: Chrome and Titanium Tamer now.
Oh, and Sega, are they still not cheeky towards their competition?
OOC: I guess Monster Rancher is still doomed to abscurity, if not more so.
IC: The Digimon games are alright but I still think they got way out of control with the monster selection and when they threw in Pinacle stage which made it completely off balance for anybody who wasn't hardcore to play. I guess it did make for more movies though that seem to be a hit with the kids.
I hear Microsoft and Sega want to partner for smartphone considering their relationship dating back to Windows CE embedded in the Dreamcast. Its a win win as Sega can break into the mobile market while Microsoft will have a first rate game selection for their Windows Mobile devices.
All this is probably going to mean the final nail in the coffin for the Panasonic Jungle portable game system which imo was more of an oddity then their 3DO.