I'm sure Nintendo can create titles that go for more realistic graphics and such. They have published games like Eternal Darkness and their own Metroid series is close to realistic than most of their franchises. Heck, Miyamoto worked with Kojima in developing Metal Gear Solid: Twin Snakes. Then you got Twilight Princess that was an answer to all the critics and fans who wanted a more realistic Zelda after Wind Waker.
It's just that Nintendo is likely not interested in making games with realistic graphics. They don't rely on making games with that kind of design philosophy in comparison with Sony and Microsoft. Most here should know the story by now about Nintendo's development philosophies. Neither is philosophy is better than the other. Ultimately, they all seek to create great gaming experiences.
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