Try to see things from the perspective of the casuals....They see this new thing (Wii) it comes along and it's exciting, it's new but part of an existing form of entertainment. So the casual gets into it, but it's an expensive hobby and it doesn't get enough use to justify the price, and after awhile it's not getting used. The casual has consumed the media to the point where they are satisified. Nintendo may have made gamers out of a few but the majority didn't stick around. Something new came along. They dipped their toe into it, maybe they are not patient enough for gaming or they would rather go out and eat and socialize. Then a new thing comes out and they are onto it.
A lot of people say that the audience of casuals with the Wii were lightening in a bottle. It's evident when they haven't even had 10% of those that bought the Wii upgrade to the Wii U after over 2 years. They will only come back when gaming once again has a shift in how the games are played. They aren't coming back for a 3D Mario and they are not coming back for Star Fox or F Zero or Link. Not in their present form. The casuals tried it, they formed an opinion and for most it's not something that will be a part of their day to day lives.
Nintendo abandoned the casuals, they stopped supporting the Wii around 2010 just after a few successful years with the Wii. The casuals did not understand that this machine with be out of date in 5 years and they will have to spend 100's of dollars to stay current. New controllers, new hardware, new games, other accessories. If they weren't familiar with gaming before that than it's a shock to them and not a good investment. Grandma doesn't understand why she needs a Wii U or what the hell it is. Nintendo failed to keep things simple, to support things, and to keep prices within reason. For this, the casuals did not want to upgrade and for good reason, Nintendo failed at the end to support the Wii and failed to market the Wii U properly, causing confusion still years later.
Meanwhile the hardcore have stayed with Nintendo but with each generation and as people grow and have families, shit economy and limited money means you can't always get by on your resume, sometimes it's only what you are doing now that matters. Nintendo fans mock the PS/XB crowd that's its' all generic games and yet I consider the LIVE/Arcade/PS Store the best gauge for gamers that love and support this hobby. Who's more hardcore, the gamer who pays for LIVE/Plus and has tons of games and achievements or the fan that plays Wii sports? Nintendo to me as a hardcore gamer, put me off with the Wii because the games felt to easy and watered down and games made for the sake of motion controls. Ultimately that the Wii succeeded so well with casuals put off a lot of gamers who saw what the PS3/360 were doing and felt like that had all the games they wanted. I consider those to consoles as having the bulk of the memorable games last gen.
Ultimately Nintendo has always been in decline at least in the console market, the Wii's success in finding a new audience and abandoning it and doing everything not for casuals with the Wii U is evidence of that, if not the sales numbers. Nintendo actually did more this gen for real gamers with the Wii U but the truth is it's a very limited and unsupported console that is way to costly compared to it's competitors. Nintendo feels like it's run out of ideas, new franchises don't catch on and old ones don't seem all that different from previous games. Nintendo is at a real crossroads, if the next console is aimed at the hardcore and done the same way with limited 3rd party support, I think they will have the same kind of sales numbers. If they do something wild an innovative like the Wii and don't make games that more experienced gamers will enjoy, they risk losing more of the hardcore base and have to hope that that console becomes mainstream enough to be successful.
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