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Make device that is as powerful as the PS4. Don't have any expensive gimmicks, then it could launch at 199 in 2017.
Treat it normally gameswise, so that it's a standard Nintendo console, but really cheap. Market the heck out of it, and emphasize that it's so cheap that you could have both e PS5/nextbox and this device because of the low price. Nintendo fans would obviously buy it, parents would deffinetly buy it due to price, and people with interest in ninty games, but not enough interest to pay 300$ for it would also buy it. Even if the hardware only breaks even, they'll make a shit ton of profit from software.