Why does Nintendo let developers co-own their IP?

[pokoko]

CaptainExplosion said:

Jumpin said:

Technically those would be second party games. Games developed by Nintendo owned studios are first party since the are directly from the platform seller. Second party are where Nintendo is the purchaser of the services of a third party in order to develop a game, and this applies to exclusive dev houses partially owned or contractually bound to Nintendo despite not being owned directly by Nintendo. While third party games are supplied by an independent studio without the first party purchaser/contracting relationship.

Pokémon and the DKC trilogy are perfect examples of second party games. Super Mario Galaxy or Breath of the Wild as first part games. Final Fantasy 7 Remaster as a third party game.

Doesn't second party mean it can be released on non-Nintendo platforms?

It's just short-hand for "first party game developed by a third party studio," usually relative to a publisher or console manufacturer.  Likewise, "second party studio" doesn't really exist, either.