i was just being sarcastic bro lol 

There is just one major hole in your theory. Nintendo is first to market this time. Somehow or someway that will make a difference.

What people putting emphasis on this 'power' argument don't count is that wii launched when hd game development was becoming the 'norm'. Wii u has launched in no such era. Many developers will not move onto other platforms until the back end of 2014.

Edit: actually I stand corrected. There are several holes in this theory. More powerful consoles would mean to launch at a higher price to begin with. And special controllers like kinect will add so yeah a higher price point is still likely. Then you think about rising development costs and that leads to more expensive games.

There are plenty of examples from past generations. I will use the most recent one. What impact has vita had on third party support for 3ds? Absolutely none. People still support 3ds anyway.

The industry is not becoming dumbell shaped ... It moved from a relatively flat structure in the early days to a several tiered structure, and is now becoming a pyramid.

According to Wikipedia, there were (roughly) 1100 games released for the HD consoles last generation, 1220 Wii games, 770 PSP games, 1150 DS games, and thousands of iPod/Android/Flash games; although the information does seem to be out of date. For each of these platforms there are games produced for budgets that range from low budget to high budget for each of the platforms, but (for the most part) a low budget HD console game had a larger budget than big budget Wii or PSP games, and a low budget Wii or PSP game tended to have a bigger budget than most DS (or iPod/iPhone) games.

Ultimately, the studios that sold 5+ million copies of games on the HD consoles last generation will (probably) be able to pick and choose what they develop, but the bulk of studios that sold less than 2 million copies will on the HD consoles will (probably) have far less choice. In many cases their choice may become to develop licensed shovelware for high end consoles, mid-range original content for the Wii U, or high end projects for the 3DS; and not all would rather make a Spongebob game for the "PS4" ...

You are delusional. Nobody is going to support the Wii U because of that. Third-party sales are simply too atrocious for it to be true, always have been, except when Nintendo bullied developers to censor games and release them according to their liking back on the 80's and 90's which didn't leave a good impression, I'll tell you that. So it is going to be better to develop for the new consoles instead of the Wii U even if costs double because they are probably going to sell 4x or 8x more like they did in this gen. Nowadays according to your budget and ambitions you either  develop for iOS and Android, or the 3DS, or the MS/Sony new consoles. There's hardly any middle ground between those.

It's funny Nintendo tried to play exactly the same card back with the Wii and it failed even before Smartphone gaming became a big deal. How do you call someone who tries the same thing multiple times expecting the same results? I think you know the answer.

Edit - I said third parties don't sell in Nintendo hardware nowadays? Well, that's a lie. There's Just Dance and the like. I bet we'll all enjoy that again.

So basically what OP is describing is that engineers will follow their vanity while increasing costs and diminshing returns kicks in and the industry burns.

So, the 1000+ third party Wii games and the 1000+ third party DS games were produced by magical pixies?

At the price most iPhone/Android games sell for the bulk of developers working on HD console, Wii, PSP, and DS games will not be able to turn a profit selling games for those platforms; and with the high development costs of producing graphics that are a "generational leap" over the HD consoles, the average developer will not be able to sell enough games to turn a profit.

These developers are not going to disappear and will likely be allocated in ways you're not considering. Some will (probably) get modest budget increases to produce cross generational games released on the XBox 360, PS3, Wii U, PS4 and XBox 720 (for the first few years at least) while others will probably be allocated to Wii U and 3DS projects.

In my opinion, the argument seems similar to claiming that car designers will focus exclusively on super-cars or entry level sub-compact automobiles; and no one would ever lower themselves to producing anything else.

Videogame fanatics today have grown up around the concept of graphics and power being the major leap in games. The developers in the west believe in it because they want to push the direction and level of control a movement in games. Engines are being created for more powerful hardware and devs will use Epics new engine which has demands or more powerful hardware. Sony and Microsoft have set themselves up for people to craft themselves around titles people play more avidly and weekly. Nintendos console will be a great console to accompany what Microsoft and Sony are doing though. If Nintendo wanted to keep the casual attention span they should've stuck with gimmicks like last gen. Casuals would rather use an IPad than a controller thats more complex plus has a touch screen. I would buy it (obviously not before the 720 or PS4) but after just to see what Nintendo has to offer.

If Japan can step it up with new consoles they will prove they can hang with the west. Using old tech wont prove that they can.

How many of those 1000+ 3rd Party Wii games are serious games?
I mean where are most of the PS360PC Multiplat games on the WIi?Where is Skyrim,Final Fantasy,AssaCreed,Dark Souls,Borderlands and so on...You get the idea
They aren't there - The important 3rd Party Games aren't available on the WIi

The WiiU will have a little bit more support till the PS4NextBox are out > Then the WiiU will lose it completely again especially when developers start to use the technical advantages of the new consoles.
Of course games like CoD that use an Engine from 1999 will still get released for the WiiU cause they don't need strong hardware.
Developers want to push forward and the PS4NextBox will be the first 2 choices for the big bulk of game developers.Its easier to develop only 3 versions that are closer(PS4 NextBox PC) than 4 where the 4th(WiiU) is far behind again.
And Yes - believe it or not and put the weed away - The WiiU will be much weaker than the PS4NextBox.

That is not relevant ...

The argument being made is that third party developers would not lower themselves to producing videogames for a Nintendo platform, when (in fact) there are more third party games released for Nintendo platforms than non-Nintendo platforms in the previous generation. The kind of games publishers are willing to fund is a completely different issue and is difficult to predict from one generation to the next; primarily because publishers chase success, and if one publisher sees success with extreme sports games or music games suddenly every publisher is trying to replicate that success.