Nintendo has never had a problem with profit. Image is nothing, thirst profit is everything.
Seriously though, Nintendo itself is making plenty of hardcore games, the problem is the lack of a current third party line up to provide the variety that the diverse group of core gamers want. Nintendo has very little control over this, and they tried to alleviate this by lowering the cost of development and control over third parties.
It will evolve, as it always does. The best casual games will continue to get deeper blending the line between casual and hardcore (Boomblox and Elebit immediately come to mind). For those expecting lots of gritty shooters, I'm sorry but it is not going to happen. 5-10 a year, maybe but no where near the number you see on 360 and PS3.
I would cite regulation, but I know you will simply ignore it.
