Diablo III on the current generation of consoles is not impossible: Blizzard managed to port the original Diablo title over to Sony's first-generation PlayStation despite the lack of mouse and keyboard support. When Blizzard revealed Diablo III during BlizzCon 2008, Rob Pardo said that a console version was "theoretically possible." Jay Wilson, on the other hand, said that Blizzard doesn't have any plans to Diablo III to make an appearance on the consoles.
So with that said, GameTrailers TV editor Geoff Keighley is now reporting that console versions are back on the table... if they ever left at all. "[They] are currently talking to the first parties," he said.
But last year Blizzard COO Paul Sams pointed out that there's a compromise when developing for multiple platforms, and Blizzard isn't in the mood to compromise, even on a good day. "We have relationships with all the console manufacturers," he told CVG. "I know they would love to have us on their platforms, ideally on their own and not their competitor! But it's all about the game experience."
Additionally, Sams also said that he wanted to keep the Diablo III audience together. Blizzard's Greg Canessa touched on this subject in an interview with Shacknews during BlizzCon 2009, saying that there's potential for Diablo III on the consoles, but currently the game is designed around Battle.net and the features Blizzard's service will provide.
"What we do in the future, I obviously don't have anything to talk about with regard to Blizzard porting consoles or not in the future," he told Shack. "I can tell you that philosophically, the company is interested in consoles. Many of us are console gamers. We all have Xbox Live gamertags, and we all play Xbox at home, and so we love Xbox. And we love Sony and other platforms as well. We have a great deal of respect for them."
Ultimately, Blizzard will need to construct a way for Diablo III to access Battle.net via Xbox Live, the PlayStation Network, and possibly Nintendo's Wi-Fi Connection. The outlook for console version certainly looks positive. Here's hoping that Keighley's insider information is correct.