Put simply Nintendo has great games that are becoming a niche market. They don't appeal to the mass of gamers anymore. Gamers now want extreme violence and higher resolution graphics.
It's not a new phenomenon either. Originally in the NES era, Nintendo was seen as a children's toy by the masses, but there wasn't any real competition offering anything different at the time. Playstation 1 came in and offered what Nintendo didn't and thus stole a good portion of Nintendo's audience while at the same time creating new gamers.
Nintendo has never had the appeal of these gamers, and with Sony and Microsoft gamers badmouthing Nintendo games as "children's games", Nintendo loses more of their regulars every year.
Nintendo only "wins" a generation now by offering something crazy. I.E. motion controls. Nintendo lost this generation because the tablet thing wasn't really anything that exciting. People carry tablets with them everywhere: smartphones, touchscreen laptops, tablet accessories, grocery checkout counter, etc. During the Wii generation, people asked themselves "can I get this anywhere else" and the answer was a resounding no; thus, they bought the Wii.
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