Overall, Nintendo tries to make sound business decisions. Looking at Western development as a whole, is it really that smart to throw their hat into that mess?
Studios are pouring massive budgets into their games to appease the western crowd and when the games fail to sell, they take large losses. Nintendo likely sees full on western development as an extremely risky business move. Studios are closing left and right and Square Enix is hurting big time mainly due to their western projects. They heavily courted a big western developer (EA) to try and mitigate the launch slump, but they pulled support as fast as they could, as we all know. Ubisoft just got scared and it might have had to do with MS's dumb policy about 3rd party games. Why blow $80m on a game targeted towards people who don't buy those games en masse? Square Enix tried it, but those games just aren't profitable and now SE is in trouble.
Personally, I'm glad Nintendo isn't pushing western development. It's really quite risky considering how fickle gamers are and SOMEONE needs to have something different. Iwata has had to deal with the large hole Yamauchi made with his business practices. Replacing Iwata might seem like a solution to the "problem", but the next person in charge would likely do the exact same things. Even though the Wii U isn't doing so hot, the 3ds will help mitigate the difference until the games start showing up. It is far too early to call for his head.
As much as we all love Reggie......could he be more of an issue than Iwata? He is the man on the ground for a large portion of the West (I don't even know the NoE guy's name....)
Edit: Also, everything Asriel said. haha
