I was burnt by Nintendo from how they handled the last two years of the N64 and looking back now and comparing it to the Wii U, it makes the N64's software output look like the PS2s software output. Back then we had Rare, Iguana and Factor 5 putting out amazing software inbetween Nintendo's amazing first party titles. Nintendo lost Rare to Microsoft after the N64, Factor 5s output was severely limited after the N64 and Iguana pretty much went bankrupt.
Well, a lot of key personnel at Iguana formed Retro, so that lineage persists to this day. And I think the writing was on the wall for Rare, although I do wish Nintendo had kept some properties - I hate that they're collecting dust under Microsoft.
But in general, you're right. Nintendo didn't do enough to create meaningful partnerships after the N64. They really should have purchased DMA Design and Free Radical, and hired staff from Factor 5 for software and hardware development.