There is the potential for this to work.
They have been clear that they will not be bringing their full fledged retail titles to mobile, but rather create new games built with smartphones in mind. People will still need to buy a Nintendo system to play the next 3D Mario, epic Zelda, or Pokemon RPG.
If they can insulate the mobile and dedicated divisions from each other, they could co-exist, like home consoles and handhelds have done since the 80s. Mobile provides additional revenue stream while maintaining awareness of their brands, dedicated systems continue to provide the kind of full fat gaming experiences Nintendo are loved for.
There were concerns when Nintendo ventured into DLC, yet that didn't turn out as bad as many feared. This could be a similar case where the reality is a lot less scary than our expectations.
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