Look at the sales of Mario Galaxy and Mario Galaxy 2. Galaxy 2 only sold 3 million less than the first one using all the same engine and assets the game must have cost almost nothing to make but made almost as much. Even the Mario party games released in the same gen sell around the same amount (with the exception of Mario party 8) of around 2 million each.  

I would eat up Zelda if they released 3 games in the series in the same gen. You can't say people would get tired of the game because look at Uncharted. Naughty dog released a game every other year and each sold 4-6 million each. Even if the first Zelda sold 5 million and the second only sold 3 million and the third sold only 2 million that's still 10 million copies sold using the assets. Each Zelda game has like 30-50 hours of entertainment so all they have to do is lower that to 20-30 increase production value with voice acting add a little more story. And in the next 2 years tweak the engine add more story by maybe fleshing out characters that were popular and they could reuse a lot of the old assets and put out another 20-30 hour game rinse and repeat.

According to Nintendo a lot of time spent developing a Zelda game is making the art styles, tones, and settings in the games so it well really helps everyone. If they are grounded into a setting, they could spend more time on making the other aspects of the game better by getting rid of fetch quests with more dungeons or side quests with legitimate rewards.

What's the down side to doing something like this?

Ya, kinda shitty fan service to the lesser IPs like Zelda, Star Fox, FZero, Pikmin, Metroid (i dont count Other M).

1 game per gen is just too long of a wait. Before you know it your 40 years old and you only had like 5 games in your favourite IP lol

Because, unlike most other developers, Nintendo doesn't like milking franchises. They actually have some integrity and decency in the way they release their games.

Nintendo's first party games aren't exactly easy to do sequels to in general even Galaxy 2 arrived 3 years after the original. Problem with their games is that they're heavily gameplay based which means design are constructed with what ever gameplay concept and tech focus they've tested and find works, this makes doing sequels a nightmare even Zelda games as the overall design has to compliment the gameplay concept. It's the main reason their games take a while to develop and next installments literally begin development near the end of their predecessor's to manage time.

Nintendo is actually smart. They aren't being like Activision and killing off popular franchises in a single generation by releasing one game per year. I think it's one reason why their franchises have survived for so long. Also, I remember once reading an old interview from the late 1990's where Shigeru Miyamoto was asked why Zelda: Ocarina of Time was getting a sequel but not Star Fox 64. His response was that his team did everything they wanted to do with Star Fox 64 and couldn't think of any way to make a better game at the time. With Zelda, there were many things the team wanted to do with Ocarina that they didn't get to do yet, that and he loved the game engine developed for Ocarina.

That's really what Super Mario Galaxy 2 is if you think about it. It's everything that they didn't get to do with the first game. It may seem like a crappy business strategy to some, but it's good to see that somebody out there still cares about their IP's.

I don't think that's true.  Galaxy 2 had a two-and-a-half year development cycle.  I'm pretty sure the game's budget was at or near that of the original, possibly even higher.  It used the same engine and some assets, but it was still a new game being created by a hundred people or so.

Maintain Value in the IP. By not releasing frequently it creates an appetite for the sequel. Though I do think it would not have hurt Nintendo to have followed up with a few sequels in Wii's late life.

Super Mario Galaxy 2 was made because they couldn't fit all their ideas into one game. Other than that, Nintendo usually want to wait with their sequels until they can substantially improve the series. New hardware always makes such improvements easier.

(Probably same reason there was no F-Zero for Wii: Online with more than just 12 players would be too laggy while the graphics would pretty much be equal to that of the Gamecube. Additionally, gameplay is way too fast for Wii remotes to be effective controllers. Not exactly a prime opportunity to increase the series' popularity.)

Wow a bunch of people taking about Nintendo sequels without them being called rehashed...What the hell am I on?

TROLL!!!