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Mr Khan said:

Almost definitely the former. As much as i hate that the state of affairs is the way it is, Nintendo essentially needs to pay to get a few third party success stories on their platforms before they'll be considered for top-tier development in general.

In this way, their rescue of Bayonetta and Devil's Third could be significant, assuming either or both games do decently well. The next step up, then, would be forming a Sony-like partnership with Destiny, big new 3rd party IP to make it best on Nintendo platforms (although this would only be possible from the outset if Nintendo had competitive hardware. Hence the conundrum).

Ultimately they're doing an okay job seeking alternate resources, like the Tecmo-Koei and Sega partnerships, Bayonetta and Devil's Third, they just need to greatly expand the quantity of such efforts, without throwing money at any old project, good or bad.

They need to look up and realize that the gaming world no longer centers on Japan.  They do an okay job with their partnerships over there but they completely fail when it comes to western developers that aren't Ubisoft.  We have so many smaller publishers over here looking for any competitive advantage they can get.  Nintendo could easily sweeten the deal by paying for ports.  Are NoA/NoE dropping the ball?  Are they being hamstrung by the home office?  I don't know but it needs to be sorted and it CAN be sorted.  Any problem they have with third-parties can be solved, if they're willing to make the investment.