No, Nintendo's stubborn and foolhardy business decisions are what drove away the hardcore audience. Not the other way around.

I would like the OP to define the word Hardcore.

Try to see things from the perspective of the casuals....They see this new thing (Wii) it comes along and it's exciting, it's new but part of an existing form of entertainment. So the casual gets into it, but it's an expensive hobby and it doesn't get enough use to justify the price, and after awhile it's not getting used. The casual has consumed the media to the point where they are satisified. Nintendo may have made gamers out of a few but the majority didn't stick around. Something new came along. They dipped their toe into it, maybe they are not patient enough for gaming or they would rather go out and eat and socialize. Then a new thing comes out and they are onto it.

A lot of people say that the audience of casuals with the Wii were lightening in a bottle. It's evident when they haven't even had 10% of those that bought the Wii upgrade to the Wii U after over 2 years. They will only come back when gaming once again has a shift in how the games are played. They aren't coming back for a 3D Mario and they are not coming back for Star Fox or F Zero or Link. Not in their present form. The casuals tried it, they formed an opinion and for most it's not something that will be a part of their day to day lives.

Nintendo abandoned the casuals, they stopped supporting the Wii around 2010 just after a few successful years with the Wii. The casuals did not understand that this machine with be out of date in 5 years and they will have to spend 100's of dollars to stay current. New controllers, new hardware, new games, other accessories. If they weren't familiar with gaming before that than it's a shock to them and not a good investment. Grandma doesn't understand why she needs a Wii U or what the hell it is. Nintendo failed to keep things simple, to support things, and to keep prices within reason. For this, the casuals did not want to upgrade and for good reason, Nintendo failed at the end to support the Wii and failed to market the Wii U properly, causing confusion still years later.

Meanwhile the hardcore have stayed with Nintendo but with each generation and as people grow and have families, shit economy and limited money means you can't always get by on your resume, sometimes it's only what you are doing now that matters. Nintendo fans mock the PS/XB crowd that's its' all generic games and yet I consider the LIVE/Arcade/PS Store the best gauge for gamers that love and support this hobby. Who's more hardcore, the gamer who pays for LIVE/Plus and has tons of games and achievements or the fan that plays Wii sports? Nintendo to me as a hardcore gamer, put me off with the Wii because the games felt to easy and watered down and games made for the sake of motion controls. Ultimately that the Wii succeeded so well with casuals put off a lot of gamers who saw what the PS3/360 were doing and felt like that had all the games they wanted. I consider those to consoles as having the bulk of the memorable games last gen.

Ultimately Nintendo has always been in decline at least in the console market, the Wii's success in finding a new audience and abandoning it and doing everything not for casuals with the Wii U is evidence of that, if not the sales numbers. Nintendo actually did more this gen for real gamers with the Wii U but the truth is it's a very limited and unsupported console that is way to costly compared to it's competitors. Nintendo feels like it's run out of ideas, new franchises don't catch on and old ones don't seem all that different from previous games. Nintendo is at a real crossroads, if the next console is aimed at the hardcore and done the same way with limited 3rd party support, I think they will have the same kind of sales numbers. If they do something wild an innovative like the Wii and don't make games that more experienced gamers will enjoy, they risk losing more of the hardcore base and have to hope that that console becomes mainstream enough to be successful.

I think hardcore is played out as a description of a significant demographic. the spectrum isn;t between hardcore and casual gamer and points in between, it's between hobbyist and casual gamers. Hobbyist gamers choose to play video games as a priority over most or all other forms of leisure activity. Casual gamers will play video games when there's nothing better to do, or as and when the social occasion calls for it.

Hardcore gamers are hobbyist gamers who pretty much devote their lives to gaming. They buy every system going each generation, and they probably also maintain a gaming PC which largely keeps track of high end performance. The number of these people in the world is counted in the handful of millions, and they really are not an audience which can be relied upon to give a system a sizeable install base. Wii U sells to these people, because these people always by every system Nintendo releases. It doesn't even matter if the Nintendo systems are their preferred systems for a given generation. There are Nintendo games they will want to play and they will not be willing to miss out just because the system is selling poorly.

A company has to appeal to the hobbyist gamer who buys 1, maybe 2, gaming platforms per generation. This is the group of gamers that is quite large, perhaps 100 million strong AND they buy a lot of games. They buy the annual franchises, they are willing to try new IP and help make them popular, they will typically own far more games for each system than the tie ratio we see here, but not as many games as the hard core. These are tyhe people that make the video game industry rival the movie industry for revenue, if not profitability.

Then there are the casuals, these people buy one system. They buy a few games, mostly party/social games and they pull the system out when the occasion calls for it. But they generally prefer doing other leisure / social things. But they do like playing video games from time to time. These people have traditionally numbered in the 10s of millions each generation. they help to sell the social games, and they might pick up a single player / online multiplayer game once or twice in a generation. They are reliable in what they do, but they can't be relied upon to generate profits for the industry. These people pretty much migrated from SNES to PS1, then PS2, then Wii. Now they are looking at the 8th gen and I think most of them are still waiting in the wings. many might well go for Wii U over the next few years, but a lot will go with PS4 too. In any case they are not a big enough market segment to have a meaningful effect on any one company.

Then you have non-gamers. Very few people are absolute non-gamers, most non-gamers play one or two free games on computer, phone or tablet. But they don't see themselves as being active in the video game industry, nor would they say they have any interest in video games. But for the first time quite a few of these people bought a gaming console with the Wii. They had a lot of fun. They bought several motion-controlled games. And then they lost interest, because playing a game in front of a TV is not their idea of a good time, even on an occasional basis. These people were the Wii fad. Without them Wii would have perhaps sold about 50-70 million and would have placed 3rd this generation. But very few of them became gamers of any description. They played Wii, they gre tired of Wii and now that they had their experience of video games they don't have the slightest inclination to take it up again. They especially have no inclination to buy yet another piece of hardware. Just to play sequels to the one or two games they played last generation. This is the Blue Ocean that Nintendo got, but who will not come back as a potential market for a few generations yet. And possibly not before the face of video gaming changes forever and the console era as we know it comes to an end.

Nintendo has the hard core. Nintendo has lost most of the mainstream. Nintendo may get a reasonable chunk of the casual gamer. There is no blue ocean available to anyone this generation. All that adds up to a fairly predicatble 15-25 million in hardware sales for the generation.

Also Wii U has already outsold the Dreamcast, so I'm not sure what the OP is on about there.

Look at the PS4 though. It isn't pandering to casuals left and right and it is selling very well. The Xbox One dropped Kinect like a dumb child and it is seeing a resurgence when Phil stepped in and started working for the gamers.

The Nintendo home console systems have never been huge sellers. There is no question Nintendo knows quality gaming but the Wii, in my honest opinion, was an anomaly. It capitalized on a gimmick (for lack of a better word) which was set to take gaming to the next level (and then forgotten when Wii U moved away from it, Move died up and Kinect failed to excite anyone)

If i had to pull something else out of my ass, I would say that the new hardcore gamers (13 to 20 somethings) did not grow up on the marios and zeldas, or even the pokemons. They are more into action/shooter oriented gaming, which is Nintendo's "meh" area. Despite their great, award winning titles, they are ignoring big segments of the gaming market by keeping most third party titles out of their system and playing it safe with their franchises.

Broken record, I know.

To me, the reason why hardcore gamers left Nintendo is because we get older and grew up, while Nintendo hasn't grown up. They still keep that light hearted, child image when the majority of us kids who played Nintendo games during the 80's and 90's are now adults and want mature titles. A lot of adult gamers don't like these cartoony, child-friendly games. I like them, but I can understand why many adults don't like them. I still buy Nintendo consoles and handheld for the first party games, because I love Nintendo's franchises. I really wish that Nintendo would create new franchises, especially hardcore franchises that adult Nintendo fans would like. Something that Nintendo themselves created, not a third party company with assistance from Nintendo, something that's all Nintendo's work and no outside support. That's what I want and Splatoon is a good start.

I'm pretty sure the 9 million who have bought the Wii U are the "hardcore".

Casuals will never come back to Nintendo, Nintendo's marketing and "style" can't compete compared to Apple and smartphone offerings that are far more stylish, hip, and also give casuals what they want -- simple games that can be had for free or cheap that are easy to play for 15-20 minute bursts. That's all the gaming they need in their life.

The iPhone/iPad have succeeded far past the Wii or even DS's wildest dreams in bringing accessible gaming to the non-gamer masses. You offer a woman (a key demographic in Nintendo's Wii/DS success) an iPhone versus a Wii or DS, and the choice isn't even a contest, they will chose the iPhone every time. Nintendo is simply not needed for casuals anymore, no one is crying out for another Wii Sports other than a few lonely voices who aren't even casual gamers themselves.

As for "hardcore" Nintendo never really was a "hardcore" company. Maybe during the years of 1995-2001 or so, they focused in on responding directly to Sega painting Nintendo as a kids company. Yamauchi angrily reacted to the Genesis eating up more than half of Nintendo's marketshare in the US circa 1993, blasting his own son-in-law Minoru Arakawa in a Japanese newspaper interview (see: the Console Wars book) for letting Sega paint the Super NES as a child's toy.

As a result NOA quickly refocused and made games like Killer Instinct, not only did they uncensor Mortal Kombat, they made their own violent fighting game. GoldenEye and Perfect Dark and the Star Wars deals among other things followed.

But that kinda was abruptly halted too once Iwata came to power in 2001/2002 and Arakawa/Lincoln stepped out. Nintendo is a family-company. The problem is even kids don't want a "family console" (they want what their older brother is playing, the PS4/X1).

3DS has less third party games in the top 30 sellers (7 third parties for 3DS compared to 13 for the Wii U) and most of the third parties for 3DS are "exclusives" (Youkai Watch, Puzzle & Dragons).
3DS is doing OK without massive third party support and also gets the JRPGs that give it hardcore cred. The PS Vita have more third parties than first parties in the top 30 sellers but are not doing so well.
So what lesson could Nintedo learn from this? Maybe do something like making a unified operating system for the handheld and home consoles.

The hardcore Nintendo gamers are still with Nintendo. The problem is their population dwindles with every generation, and Nintendo hasn't done much over the past 2 gens to increase their numbers.