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I always pronounce the letters.  It's what you're supposed to do when abbreviating a title with the first letter of each word as in the case of Nintendo Entertainment System.  I have heard people on YouTube and such say Ness, Sness, and even the more oddly sounding Snezz, which I guess they think sounds jazzier?  But, does anyone pronounce I B M as ihbim (or something along those lines?).  Or AT&T as ahtint?  I've also never heard the PS4 pronounced Pzzfore.  So, it doesn't really seem logical to me.