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To me, just my gut feeling is this may signal the end of the traditional Nintendo console, but it doesn't sound like they are willing to go third party or make smartphone games full blown either.

Perhaps a Cloud-based type service where you don't pay for any hardware or just a cheap $50 receiver or something and then you can order/stream Nintendo games? Something like that?

This sounds serious though, I don't think is just some minor modification to how Nintendo does things.