I'd say Nintendo are out of touch with the market, and are out of touch with how to market themselves, so I went for the top option--despite the fact that Nintendo providing a genuine alternative being one reason why I buy and enjoy their hardware.
Nintendo of America had the right idea in turning up to VGX, but turned up with the wrong footage and game to promote. I don't know if that's their fault, or if Nintendo Japan only authorised Reggie to show something from Donkey Kong, rather than giving them permission to show new footage of another game. It has to be said though, that VGX was by and large a disaster for gaming in general: a moronic festival of all things dudebro, it's definitely not reflective of what gaming is now. So while DK was absolutely the wrong title, Nintendo had the right idea in that they need to promote their products more--but I also don't rate VGX as a venue for videogame advertisement.
In broader terms, the initial struggle of 3DS, and the continuing severe struggle for Wii U, answer the question for us: Nintendo are absolutely out of touch because their home console is not finding an audience. The market just isn't interested, and that's a sure sign that Nintendo are out of touch in that respect. I don't think VGX is the epitome of this as some people do; the epitome is surely the simple fact that Nintendo have wasted an entire year with Wii U.
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