Chasing after the COD crowd by throwing hundreds of millions into development, marketing and free rohypnol vouchers would be a foolish move on Nintendos part. The dudebros are too jacked up on Mountain Dew and keg stands to take any notice of what Nintendo does right now.
Ninty's best bet is to concentrate on producing experiences that appeal to niche groups of fans that they can't get elsewhere.
If the Wii U becomes the best place to play JRPGs, where are the JRPG fans going to go? Same for fans of platformers, puzzle games, indie games, racing games, etc etc etc. Yes, they may have another console to get their hookers and headshot fix, but Nintendo can provide the games that the other consoles and publishers don't want to take a risk on.
Chasing the mainstream is a sure fire way to fail for Nintendo. Blockbuster games are either huge successes or ridiculous failures, and with how mainstream gamers view Nintendo they would almost certainly fall into the latter category.
Concentrating on niche games, that can be made and marketed for less money, means that the bar for each game to be considered successful can be lowered to the point where a modest profit is acceptable. And due to the lower costs, more of such games could be produced, simultaneously increasing the chance of one becoming a break out hit and having mega success, but also decreases the impact of any flops.
Think about it; if you have, say, $250 million to make and market games for a particular year. Would you be wiser to make 1 all or nothing game aimed at an audience that historically shows very little interest in your products, or 4-5 niche games aimed at markets that other publishers and developers are ignoring.
The niche titles should also be sold at a lower price, to further differentiate them from the massive blockbusters.
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