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Yakuzaice said:

Thus they ceded the casual market.  Nintendo were only fooling themselves if they thought they could sell Brain Age for $30 on 3DS.  That's the thing, a lot of their casual software on DS is not all that different from lightweight e-shop software or iphone games.  Yet they thought they could garner a retail release at a high price.  Would making Brain Age a $1-5 downloadable title seriously be game over?  PC has proven that games can exist at a multitude of different price points and pricing models.  Right now the top 10 on steam range from $3.39-59.99 with most falling about halfway in between. Even phone games have shown this to a lesser extent.

Also, I feel like the whole premise is misguided.  If the casual market is already buying the dirt cheap iphone games, would it really make an impact on Fire Emblem sales if Brain Training was dirt cheap as well?  It's not like Nintendo is planting the seed, it had already sprouted a long time ago.  I mean you can get Minecraft on phones for $6.99, yet sales seem to be as good as ever on PC at ~$26.

If their current model is so lumbering that they couldn't make changes in the 6 years between the Wii and Wii U, then they should probably take on whatever cost there is to reorganize.  It would do well for them not to be so centered around those key artists as well.  The same could be said for a lot of Japanese publishers though.

You make good points, but can all this be blamed on Iwata? Much of these decisions (full game pricing, company ogranization model) are part of Nintendo's fiber. Is Iwata the man to change this or is that part of their company identity and culture, hence decided on by a board?

If their choices are bad, then they are all to figure it out I believe. I could be wrong since I've never been in their board meeting, but from what I understood most architectural decisions like that are decided by the board which include Yamauchi, Miyamoto and a few others last I was informed (I could very well be wrong).