What can they do? I genuinely don't know. If you look at GC and N64, they struggled to sell large amounts of hardware relative to the competition despite the fact that at that time their IPs had even broader appeal than now, nowadays there's too much of a stigma amongst large parts of the PS360 audience about nintendo being for kiddies after the Wii sold so well to casuals that I think even lots of great games with the right genres and aesthetics would struggle.
They might be able to make uncharted type games for example, but I think they would sell very poorly for years until nintendo managed to readjust their image and given their conservative management I doubt they're keen to do that because of the losses it would create
Really they either need to accept that their potential for success in the console market is limited and just budget accordingly so they still make money off it whilst focusing on handhelds or pull a Wii and bottle lightning for a second time (which may just create another cycle and therefore, another WiiU). That or make something a bajillion times more powerful than PS5/XB2 and much cheaper which the 3rd parties couldn't ignore
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