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Honestly that is pretty crap reasoning but sadly I can see it as to why Nintendo wouldn't do it.

While Japan never warmed to Fox and his crew, at its height the western territories loved the original and Star Fox 64. A sequel that didn't try to reinvent the gameplay drastically but refined bits of it that weren't well received could easily make Nintendo enough money to justify a modest development budget and probably a decent promotional push.

Heck, Star Fox 64 3D almost sold a million despite having a gimped version of 64's multiplayer. A new Star Fox game on either the 3DS or Wii U could be very well received. But idiot and gutless business people that think, western gamers won't get over the fact that their animals or people in Japan don't like it so no one else will either, are what has kept a promising franchise from capturing more glory.

Not to mention with the rise of digital only releases there is no excuse as the franchise is popular enough that people/fans are willing to purchase digital games and the cost to stock shelves is dramatically smaller. It doesn't take that much to make a game like Star Fox or F-Zero a priority to expand your catelogue, the current leadership however prefers to play it safe and release easy to make games or sequels rather then actual development being done on something that requires more craft then interesting puzzles or graphics twists.