Nintendo's biggest mistake was how it treated third parties. They all abandoned the N64 for greener pastures on PS1. Things started to turn around when Iwata became the President around the time of the GameCube launch, and then Nintendo's second biggest mistake became more obvious: its image problem.
Nintendo had a lot of "family-friendly" appeal, and not much else, which is a nice way of saying parents knew Nintendo games were okay for their children. Of course, most Nintendo games are suitable for all ages, but once it had the reputation of being for kids, something you grow out of and move on to "big boy" consoles like PS2 or XBox, it was hard to shake.
Nintendo turned this image problem into a positive by not confronting it head-on. Instead of trying to do a 180 on its "kiddy" reputation and go head-to-head with Sony and Microsoft for the teenager market, it curved its image slightly. They made games truly "family-friendly" by making them fun for families to play together, taking the emphasis off of kids playing by themselves.
They've also gone back to the NES marketing strategy by sort of ignoring the fact that their products are video game consoles. Nintendo marketed the NES as an "entertainment system," a 'thing' that happens to play games. The DS and Wii got their popularity a similar way. People who bought those consoles for Brain Training and Wii Sports don't think of themselves as 'gamers' and don't want to be treated like gamers. They don't even consider Brain Training or Wii Sports video games. This is the meaning of Nintendo's new "I am not a gamer" ad campaign -- they know how this part of their audience thinks.
It's an odd kind of marketing, too be sure. Nintendo is basically saying one thing and doing the opposite. They're pretending to be a kind of service provider to the masses -- a company that makes interesting interactive products, hip new technology, not really video games. Meanwhile when you get to the heart of the company, they're really all about making games. They don't care about much else. Everything they do is about enhancing the gaming experience. It's really weird, but if people want to delude themselves into thinking they're doing something other than playing video games while they're rolling virtual bowling balls around, Nintendo seems to be fine with that.
