It's not so much 'console limitations' as it is that they can be disruptive. Chat bubbles were the dominant means of chatting in the PS2 game Phantasy Star Universe, and even had an interesting system where the same chat bubbles, like exact same, would merge into larger bubbles. The problem is that chat bubbles work great in single player games, but when you get 2-3 dozen people all chat-bubbling it up at the same time... in the same area, you get alot of screen space blocked by chat bubbles. Anyone who's played PSU can tell you how bad that can get. Especially the larger chat bubbles, those could grow to fill the whole screen.