Those numbers ain't right though. There just vgc numbers and not including digital.

Nintendo has always based decisions on their games based on how they perform in Japan.

You wonder why we have seen no sign of certain series like F-Zero, Metriod and others with long breaks between games yet Kirby, Mario and Pokemon games including their spinoffs are almost annual at this point? Nintendo has has been subtle but it isn't too hard to read between the lines with the bias toward trying to cater toward their own homeland first. It even makes more sense from a business stand point in terms of distribution, as if a game does well enough in Japan, everything it makes overseas is considered gravy. If it flops in Japan, everything it does overseas has to offset not only the initial development but shipping (if it is a physical release) and localization costs as well.

Edit: On the Legend of Zelda series, that is one of the perfect anomalies in terms of Nintendo franchises but shows how they operate. In Japan, it is basically considered a average series, well respected and its characters iconic but not a big system mover over there. Meanwhile, it is huge outside of Japan and big enough success that Nintendo puts a lot of effort into making each console release a epic spectacle to showcase the Nintendo hardware and they have no problem with milking it with spinoffs here and there to pad the lineup, knowing that it may not sell as well a new Kirby release in Japan but the spinoff will make up for it if not more in NA and Europre territories.  Meanwhile despite being popular franchises like Metriod and Star Fox only do so well in Japan and better outside of it but bad releases or receptions make it that Nintendo may not be willing to make sequels for a long while. We've seen it Metriod, nearly saw it with Fire Emblem before Awakening and are probably seeing it now with F-Zero, Punch Out and the like.

Sales in Japan have a big impact in what games Nintendo pushes forward with, however if the sales outside of Japan are big enough, Nintendo is willing to make the games.

The Mother/Earthbound series I think is the exception because the main guy behind that one seems fine with closing that series with 3 games and while popular, it wasn't a blockbuster like Smash Bros so they are likely willing to let it end there outside of ports and possible remakes down the road.

This is an ongoing investigation: Does (NCL) Nintendo HQ use sales numbers from Japan only when they decide which games that are worthy of a sequel?

So far it seems as that  (with a few curious exceptions) a console game for a Nintendo home console have to sell close to 1 million copies - IN JAPAN - to get a sequel. Games with Mario in the title can sell a little less.

This explains why we get Mario Tennis (N64 - 1060k) instead of Mario Strikers (GC - 200k) , Mario Sluggers (GC - 260k) or even Mario Golf (N64 - 650k). This explains why there are rumors of Diddy Kong Racing (N64 - 890k) and that it was so hard to get Starfox (SNES - 800k). Other sequels we probably can forget are Metroid 3D (best selling 3D Metroid in Japan is Metroid: Other M -130k), F-Zero (SNES - 890K), Wave Race (N64 - 340k), Pilotwings (SNES  - 480k), Mario Paint (SNES - 710k), 1080º (N64 - 130k), Endless Ocean (Wii - 120k). This could have been a major component in Nintendo not fighting for Rare. Except DKC Rare did not sell well in japan, not even Banjo (N64 - 550k)

If this rule is true there is a bigger chance of Rhythm Heaven U (Wii - 770k) than Metroid 3D U. Metroid 2D could happen though (NES - 1040k)! Even games like Mario Galaxy (1020k & 980k) and Luigi's Mansion (Wii -460k) could have a hard time getting a sequel. This explains why Twilight Princess (Wii - 600k, GC - 40k) is the Zelda game that will not come to Wii U (remake or VC).

Strange exceptions: Xenoblade Chronicles (Wii - 160k), Fatal Frame (Wii - 100k), Fire Emblem (SNES - 700k)

Please fill in with your own examples. I will try to come back with more numbers and "proofs".

EDIT: This also means no sequels to Splatoon (~300k), Captain Toad (150k) or Hyrule Warriors (130k).

While your theory is believable your data is all over the place.

1. Why is 890k enough for you to buy diddy kong rumors, but 800k isn't enough for a star fox or F-Zero sequels? Also 800k is pretty good for Japan.

I know this, but the DKR numbers are from 1997 - N64. The F-Zero numbers are seven years prior 1990 SNES. It does not explain a lot - I hope to come back to this.

2. You cite a ton of games that got sequels. F-zero got 2 (not including GBA games) and it was confirmed Nintendo tried to get a 3rd party to make another for wiiu. Wave Race & pilot wing both got sequels, hell launch title sequels. 1080 got a sequel. Endless ocean got a freaking sequel on the same hardware no less. And they made 3 prime games even though none of them sold well in japan. And if DS sequels count than Luigi's mansion got one too.

I know this too, my guess is that they have one limit for allowing to make a franchise (I suggest 1 million) and another limit that allow a couple of sequels. Especially if it is a genre that Nintendo lacks. There are also games that seem to go unaffected by low sales (Xenoblade, Fatal Frame and others).

3. It is important to remember japan sales have lower threshold for success (as well as they tend to be front loaded).

I would say they weigh japan heavily but they certainly make some games for the west too.

I am often surprised by the small japanese sales that still allows for continued sequels. The costs for domestic distributed games must be quite low. As you mention it is mostly Nintendo games that has any kind of "legs" to their sales while other games are on the top list for only one otr two weeks.

I am not sure Nintendo as a business "understand" the western market at all. They should be aware that the west wants graphics, realism, "maturity" and all possible online features. I try to prove that they really do not care as long as they can profit from their domestic market. I more or less say that Nintendo are poor businessmen.

baloofarsan said:

This also means no sequels to Splatoon (~300k), Captain Toad (150k) or Hyrule Warriors (130k).

Skyward Sword sold 370k and we are getting a new Zelda, Hyrule Warriors sold 130k and is getting a port, Xenoblade sold 160k and is getting a sequel. So, my point is that Japan sales are not the final say. 

Yes - testing and refineing my hypothesis. It is probably not an absolute rule but I will explore it and return when I think I have more "proof".