Their best bet is two new Nintendo-made IPs - one to cater to casuals and bring them in, like the Wii IP did - and another to cater to the traditional videogamer market. One blue ocean, one red. Keeping the classic IPs flowing is good and keeps people happy, but there always needs to be something new to bring people in. Nintendoland does NOT count for either, btw.
I think I could agree with a smaller screen working well. I prefer the larger screen, but I can see others not so much, and I'd probably prefer having an option between the two.
It's too dangerous to wedge yourself into a niche demographic. That can succeed for a time, but what if the next generation, that demographic doesn't care to upgrade? If you've already settled into that image, you'll have a really hard time bringing in new people. The Wii was a one-hit-wonder - I doubt if the videogaming market will see another hit craze like that until at least the 10th gen.
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