I think it's two of those.
Lack of games: Pretty clear, and sales will certainly pick up when more games start to hit. But many consoles, significantly the Wii itself, have had good early sales even without fantastic early lineups.
To recreate the success of the Wii, it would have needed to focus more on attracting the casual gamers, and having the average non-gaming consumer interested in picking one up for Christmas. There can be no denying that they kind of failed with this one. I feel like a lot of their potential base has gone to mobile and Facebook gaming, and they need to do more to win those sorts of people back.
Actually, what I really would have liked was for their prediction to come true and people to move from the lighter casual games to deeper and more interesting titles, but unfortunately that never really came to pass, so they're kind of stuck. It'll abate a little with more games available, but it's never going to hit Wii levels, and perhaps not even PS3 and 360 levels.
(Former) Lead Moderator and (Eternal) VGC Detective 
