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pokoko said:
It's the path that they've chosen. Changing that path now would require serious effort and money, neither of which Nintendo seems keen on dedicating to western third party developers and publishers--though they will give money and attention to Japanese third party develops and publishers. If I were a Nintendo fan, I think I would be more annoyed about that discrepancy than anything.

Otherwise, many companies do just fine by sticking to a niche.

It's a bit different being a hardware manufacturer than simply a content provider, however. A niche company on iPhone, for example, potentially has access to all of iPhone's consumer base. When your entire platform is niche, on the other hand, you have to continually find ways to bring in new customers to make up for the ones you lose naturally over time. A lack of growth will eventually lead to contraction and brand erosion down the line.

I see what you're saying, but what is niche about Pokemon, Super Mario, Animal Crossing, and Mario Kart? About Tomodachi Life and Monster Hunter? Smash Bros. and Splatoon? These are titles that appeal to a wide variety of demographics. If anything Sony and Microsoft risk contraction, as those companies (and third parties) are relying more and more on entrenched customers spending more instead of recruiting new customers. Look at PS4 Pro and Scorpio. Not exactly reaching for the lowest common denominator.