If they want to stay in business, yes. (Edit: although with the right strategy, installed base size isn't the only thing)
I don't particularly like the old "third party games don't sell" excuse since Nintendo tends to get crappy third party games...we could alternatively point out that Cooking Mama is almost single-handedly saving Majesco and that Raving Rabbids and Red Steel are both million-sellers on the console...
All that said, none if it matters if Konami can't make a really good 3D Castlevania...so far they're having trouble. Unlike most people, I consider Castlevania 64 to be quite good, but it seems that Konami has written it off just like the public.







