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RolStoppable said:

As for the "home console games don't work on handhelds" conventional wisdom, I don't believe it to be true. What we do know is that it didn't work for Nintendo's competitors, but on the other hand, Nintendo's own games have resulted in several multimillion sellers up to this point. I think the correct interpretation is that competitors' games have, quite frankly, sucked. More specifically, all too often did we have to deal with style-over-substance games which is the opposite of Nintendo's general approach to software development. Once the style is removed due to being played on weaker hardware or by virtue of a much smaller screen size, competitors' games didn't have anything left going for them.

Perhaps this is true: I moderated my earlier statements because I had the Ocarina port in particular in mind, for example. That said, I still have to question whether that's enough to carry a console, as opposed to simply moving software units when that's a side dish instead of the main course. The Home Console Lite games remain a distinct minority on Nintendo handhelds, and while things may have changed over time, and correlation is not causation, I still can't help but recall that Nintendo has historically crafted its handheld titles and its home console titles somewhat differently, its competitors haven't, and Nintendo has succeeded where others have failed.

Regarding the excluded portions on your post, my concern isn't actually for the graphics output per se, it's for the feasibility of attracting games. I'm not as blase yet about cutting out the entirety of the Western developers, especially because there appear to be fewer and fewer Japanese developers actually releasing games in a timely manner, and many of those that remain appear more dependent on first-party assistance than their Western counterparts. If Nintendo adopts this approach, I don't think it's hard to envision a scenario where they must effectively fund or subsidize a large chunk of the content for their system(s). I concede that approach isn't inevitable, but it's not far-fetched either. And if that happens, then from a business perspective what was the point?

You said Japanese developers came around on the 3DS in Japan, but leaving aside how that system has performed indifferently outside of Japan have developers really come around? Atlus has shown up to play for certain, but Capcom allegedly needed a lot of incentive to bring and keep Monster Hunter around, and after launch their offerings have dried up. Ace Attorney got made, but Resident Evil went AWOL to the point where Revelations 2 is skipping the system entirely, and other than some Lost Planet spinoff I can't think of anything else Capcom has made for the system. Konami never really appeared, every Tecmo game apparently needed Nintendo assistance, Square Enix has reduced its production since last generation, Namco made almost nothing but low budget and licensed games until Smash Bros, and non-Atlus Sega has been tepid at best. Before Yokai Watch even Level 5 announced that some its flagship titles would be skipping the 3DS for mobile.

I mean, it's not bad support by any stretch, but the system seems to be Nintendo doing most of the heavy lifting, with some of the other heavy hitters needing incentive to get on board. In light of what happened with the Wii last generation, I'm not so sure that waiting for third parties to eventually come around will be as fruitful as it theoretically should be.