First off, the SNES was not a major decline or under-performer for its time at all. They simply had stronger competition than they had before.
Second, what you don't realize is that market disruption is not always the key to success. With the Wii, yes it was the right time for a system like that. But look at the PS2: The most successful home console ever by a wide margin. Did it offer any new ways to play or new hooks never seen before? Other than the inclusion of a DVD player, no, it didn't. It was just the right system at the right time; outperforming the Dreamcast by just enough in both power, and most importantly, support, and not able to be outperformed enough in these areas by any competition in the near future.
Many of the "blue ocean" people who bought the Wii were the expanded market customers who played Wii Sports and bought Wii Fit, but then failed to continue to support the console because they're not true gamers. The PS2, however, was largely bought by people who play games and continued to support the system by buying more games consistently. Yes, it's important to try to appeal to the former, but it's the latter that keep consoles successful overall. And when your as successful as the PS2 with the latter, you end up with some of the former as well.
It's too early to tell whether or not Project Cafe will be a resounding success, but I believe Nintendo is going for a PS2-like strategy; coming off of a successful predecessor and aiming to be the right system at the right time for the market.
A few problems with that, first off, the SNES was a failure for its time, the only reason that Genesis became such a strong competitor was because of Nintendo missteps.
The reason expanded audiences didn;t contiune to support he console was because Nintendo never followed through with the ideas of Wii Sports and Wii Fit, motion plus and the balance board got almost no support from Nintendo.
Nintendo will never enjoy the same level of third party support on Cafe that the PS2 saw, so the idea that Cafe will somehow emulate the PS2 is just wishful thinking, at best it will get ports and mediocre multiplats
1. What missteps did Nintendo make with the SNES? They had all of their major franchises including a fantastic 2D Mario and Mario Kart, not to mention great 3rd party support. Remember that home consoles weren't used to seeing 100m selling systems yet...
2. This I can agree with to a degree, especially about the balance board, but one could argue that we did see ideas expanding off of those games, they just weren't good enough or different enough to appeal to those who were sold on Wii Sports/Fit. Games like Wii Music, Carnival Games and tons of other 3rd party shovelware are essentially trying to appeal to the expanded audience, but perhaps the desire for those market expanding games just wasn't there from a longevity standpoint.
3. Here, what you say is certainly possible, but there's so many people who assume that Nintendo automatically means little to no 3rd party support, and that this will never change. Why? Look at the NES compared to the Sega Master System and Atari 7800. I don't think anyone would argue that. But the SNES too had nice, healthy support from 3rd parties. Probably the biggest 3rd party game at the time, Street Fighter 2, absolutely obliterated the Genesis and TurboGrafx version's sales on SNES. If Project Cafe is truly being created as very developer-friendly, there's no reason why we won't see third party support return to Nintendo. It's even rumored that Rockstar has a development kit for Project Cafe and is planning GTA 5 as a possible launch game. It won't be exclusive, but if Nintendo gets to unveil the game for their E3 conference it would be a huge coup for Project Cafe and speak volumes as to what 3rd party support could look like.