I thought Michael Pachter had a pretty simple and compelling argument. You mainly make money off of consoles by:
1) Royalties/Licensing fees from third party games.
2) Selling your consoles at a profit
If I remember correctly, Pachter said that the WiiU makes a profit (dunno if he means contribution margin or an average profit including overhead) of $5.
If you also accept that Nintendo has been losing more and more 3rd party support (didn't an Activision executive say something about Nintendo fans being "all talk"?) that limits Nintendo's ability to generate revenue from royalties. On top of that, as the next generation goes on, the WiiU probably will lack the power to receive proper ports of 3rd party games.
So you basically have Nintendo not generating profit from method 1 and 2, and also limiting their ability to maximize revenue from software due to releasing on only 1 platform.
From an opportunity cost perspective, Nintendo is wasting its shareholder's money.
