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Because Nintendo knows their market will pay. That's simply how economics works. Nintendo ecosystems generally lack significant competition at the higher end, which puts the "supply and demand" equation firmly in Nintendo's favor. What are you going to do if you buy a Nintendo system and want to play top level games? Unless you give in to Nintendo, you're basically screwed.

There is also brand loyalty to consider. Nintendo has to be aware that their existing fans will defend this for them in their stead.