Here are the main points said by Miyamoto during that Q&A session regarding this

1. The important factor is that we make software that can sell a lot
2. In Games business we rely on big hits that can offset low selling (failed) games.
3. The big selling games allow us to create another challenge/game
4. Our basic goal is to make big software that sells 2 million copies and is profitable
5. If we release only in Japan the game may sell 300k and that would not be enough to cover costs
6. Therefore our goal is to release global and aim for over 2 million sales.

This is from the Japanese translation on the website.
It omits some extra answers given by Miyamoto on the live conference.

English translation may be similar but will no doubt be edited slightly when it comes out.

My understanding of this is that for the AAA style games they make on console they need to sell over 2m to be profitable and that would in theory allow them to invest back in to a new sequel/game and offset any loss from games that didn't meet sales targets. 

Basically they're saying that they rely on hit games to drive their games business. 

Once again, this isn't talking about Zelda in particular but the average/big/AAA Nintendo style games. (So I guess Zelda would be included, but they're not saying just Zelda. If that makes sense)

There is also a hidden message in this answer if you read between the lines, and it refers to point 5. Basically it's clear that Japan market is not enough on its own anymore for games to turn a profit. Games in the past could sell a good amount in Japan and generate a profit there but now they have to rely on the global market in order to hit sales targets. It could also hint that Nintendo's next device/software will have considerably more Western focus than Japanese focus. e.g. similar to PS4. 

Can someone please post this in the OP and change the title to more accurately reflect the notes above. Thanks. 

I would like to assume they are referring to their big budget titles such as Zelda, Mario, Mario Kart and now Splatoon. Budget games like Tokyo Mirage Sessions and Star Fox Zero should not factor into this.

cool -thanks-   and i do agree Ultra Smash could not have taken long - i wish they had spent more time on it - may have been a better game

Being the first one only crossed the million mark when it hit the 3DS as well, I think even if the game missed the mark they were pretty much expecting it.

Thanks for the clarification.

2 million for the average big title sounds reasonable.

You're referring to Xenoblade, correct?  That's the ony series besides HW in my post with a 3DS game, and HW sold like bonkers for a Warriors game even before Legends.

But yeah, I don't think they expected high sales for Xenoblade since at the time of release it was already clear the Wii U was a failed project, and a niche title on an even more niche system was not going to do well without bundling.  But the budget still clearly went into it as a higher-budget game, so I'd lump that in as one of the higher-budget titles even if it wasn't expected to sell like one.

So, the official English translation is out, and as I thought, it does NOT say that they have to sell 2 million on average.

Here's the actual sentence in question: "So our basic premise is to create software that will sell in the range of at least two million units" - in other words, 2 million is their target, not the amount needed. They want their games to sell 2 million, it's what they aim for. It's not the necessary number to make a profit.

Thx! I knew right from the beginning that something was fishy.

Pretty sure the Wii U avaerage is way below 2m.

Thanks, now that makes sense :)