The whole videogame industry -- especially its most avid consumers ("hardcore gamers", if you will) -- has a bit of a Napoleon complex when it comes to their medium. It's not entirely unwarrented, since it took so long for videogames to become accepted as art in the mainstream. But it causes some people to become really defensive on the matter.
What I mean is that I doubt that most filmmakers, musicians, or writers are really concerned with "making great art." You never hear Stephen Spielberg or Martin Scorsese saying that they try to make their movies really artistically great; rather, they set a goal they want to accomplish with their film, and then they try to make the best film possible that accomplishes that goal. How could the director of Schindler's List and Saving Private Ryan make a movie like Jurassic Park or The Adventures of Tintin if he was always obsessed with making great art? Maybe Jurassic Park wound up being great art in the process, but do you think that was on his mind while he was making it?
If we could go back in time and ask a great classical composer what his main goal was in writing music, I doubt he would say that he wanted to "make great art." Hell, most Baroque composers would be practically required to answer that their main goal was to please their client... not so different from Iwata's comment. It's a pretty humble response, actually.
This interview aside, it's clear from everything else Iwata and Miyamoto have ever said that Nintendo's entire purpose is to make great games. Not great art... great games. Yes, games are (or at least can be) art. Therefore Nintendo is making great art. But that's not what the company is concerned with. Even on an individual level, the people drawing the concept art, making the character models, writing the music, aren't thinking about their work as art. They're thinking about it as a piece of the whole; they're designing characters that the player can relate to, that fit in the world they've created. Writing music that accentuates the mood of the situation, helps the player grow more comfortable with and immersed in the game. No one is in it specifically to make art.
