Another problem with the console market I think is that huge display HDTVs have become the norm now and people expect graphics like Uncharted as the benchmark.
It's not like the 80s/90s/2000s anymore where the majority of households still had a 20-27-inch fat tube TV with SD resolution.
Because of the HD revolution, what people expect from games has changed, the home console is now known for big budget, spectacular (and violent) action games or realistic sports sims with high end graphics, neither or which Nintendo does very well.
"Mid-tier" and "entry tier" gaming and "cartoony" games now find their home on Nintendo portables and mainly smartphones though they still have a niche on home console thanks to indies.
It's kind of like how the movie business has changed ... today everything has to be a franchise (preferably a comic book one). The "mid-tier" blockbuster that was largely driven by movie stars like Julia Roberts and Tom Cruise and Tom Hanks with no special effects (Pretty Woman, Rain Man, Forrest Gump) have virtually evaporated from mainstream Hollywood in favor of big budget CGI "event" movies or kids CGI movies. There used to be a balance, but not anymore.
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