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in the main markets the hardware is often pretty cheap compared to the smaller markets, while in some of those smaller markets the software is available very cheaply

with region locking Nintendo wants to prevent the situation that people import hardware from the main markets and software from those small markets

one could say this protects the smaller markets, as official releases won't happen there if the hardware can't be sold at a good profit

ofcourse that argument looks a bit silly if the only company enforcing this actually doesn't release in all that many markets