Nintendo isn't in the business of making simulators (think ultra realistic racing games, shooters, whatever) , but instead the business of making games. Nintendo has put out way more fanciful games then realistic games (although I'm sure there are a couple). With the success of Mario Kart why would they spend time making a different type of racing game when other 3rd parties can take care of that. Instead they can create other games like Tennis, Golf, Soccer, and other totally new IP with the 3rd parties filling in the gaps that they leave, like the more realistic games.
Mario is in everything because people love Mario, Luigi, Peach, Yoshi, Toad, DK, Bowser etc... so why not give people the characters they love in various games they like to play. It doesn't matter what game we play, if Yoshi is in it, that is the character my wife chooses, and on top of that she'll be more likely to play too. I've never bought a realistic tennis game, but I've bought Mario Tennis for the GC and the thing i like best about it is the special moves with the Mario characters, not how realistic it is. Why make a fanciful tennis game without Mario and company? For example, how many people would buy "Some new character kart!!!" over "Mario Kart"?
Back on topic, I only have 2 complaints.
1) make it possible to skip cut-scenes
2) make it possible to remap buttons on more complex games, so FPS or fighter games should support re-maping.
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