What changed is that Sony and Microsoft were willing to lose billions of dollars on hardware, and spend millions of dollars to secure exclusive third party games for their system, and were trying to push all competition out of the market. Much like a small chain of grocery stores suddenly finding themselves in direct competition with Target and Walmart, Nintendo was struggling to compete on the same terms as Sony and Microsof.
With the DS and Wii Nintendo (essentially) decided that they weren't going to play by the same rules as Sony or Microsoft anymore; and as a result they have become much more competitive. Using the grocery store example, while Sony and Microsoft are like Walmart/Target, Nintendo became like Whole Foods and started targeting people based on "healthy eating" rather than on lowest price.
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