Alrighty then! Lets get to it:
I. Overfishing of the Blue Ocean
Nintendo with the Wii hit an absolute diamond mine by tapping into the "Blue Ocean" of non-gamers, family-oriented gamers (children, parents and relatives), and lapsed gamers (gamers for whatever reason have not gamed in 1 to 3 generations). You can only keep a good secret for so long and both Microsoft and Sony are bringing their fishing trawlers with their mile long nets into the Blue Ocean. Next generation, Nintendo will not have all the prime fishing spots they did in the first 2 to 3 years with the Wii. Microsoft and Sony will be in the Blue Ocean from the get go.
What was once a Blue Ocean with a sole fishing vessel with a Nintendo logo and Mario's face on it is now accompanied by Sony and Microsoft vessels where fishing lines will tangle and red blood in the water will be apparent from land.
II. Complete, Entire, Utter Underestimation of Online Gaming
Nintendo is stuck in the 1980s and 1990s when it comes to multiplayer. They think putting out a console so that the whole family can play is multiplayer. Sorry, but the younger and current gamers who buy games year round besides the Holidays conceptualize multiplayer as sitting alone in their room with their headset on and connecting with their friends via Xbox Live or PSN.
Is it no wonder that Modern Warfare 2 and Black Ops have had the best opening 1st week sales ever in the history of gaming? No, if you consider that the majority of video gamers conceptualize multiplayer as an activity performed online, not in their living room.
III. Lack of Top Notch Western 3rd Party Support
Sega, Capcom, Atlus and other Japanese developers putting out the vast majority of Wii 3rd party games. As Ben Stein used to say in Visine commercials, "Wow...." Really, if Nintendo wants to put the hurt, at this moment they should be knee deep in contractual talks with EA and Activision on how to bring their top notch multiplatform titles to the next generation. History gives us a bad guide where EA released Deadspace for the Wii and it bombed. Same thing is likely to occur with Activision and the Goldeneye remake.
IV. Overreliance on an Unreliable Gaming Market
For the same reasons many, including Sean Malstrom, praise Nintendo for the Blue Ocean business strategy, I raise just as many questions:
1. How many games do these Blue Ocean gamers buy per year? Year round game purchasing? Only during the holidays?
2. Are these Blue Ocean gamers one to three game players like the soccer mom who is a hardcore Tetris player?
3. How likely are Blue Ocean gamers to lapse and leave the market?
4. Do these Blue Ocean gamers buy new games besides just sequels to Wii Play or a new Super Mario Bros. game?
V. Overreliance on Milked Out Memes
Mario, Zelda, Metroid, and Donkey Kong are what Nintendo considers "core." Looking at Other M's sales, one can rightfully say Nintendo does not know what the "core" is. Metroid is about as "core" for a Nintendo franchise as you can get. From the first Metroid in the 1980s, Metroid was always the lowest selling "core" franchise in comparison to Mario and Zelda meaning it appealed to a very specific, niche of gamers who were crazy for Metroid:
http://www.vgchartz.com/worldtotals.php?name=Mario
http://www.vgchartz.com/worldtotals.php?name=Metroid
http://www.vgchartz.com/worldtotals.php?name=Zelda
As you can see, both Mario and Zelda have more mass appeal (sky high sales numbers and whether your sister would love to play it) than Metroid making them more "casual," NOT casual games. As a "core" gamer myself, my beloved franchises I am a devout fan of are Legacy of Kain and Fallout. Neither are known for their mass appeal or sky high sales numbers.
As for Donkey Kong games, with Donkey Kong Country you have another series with mass appeal. By any means, Donkey Kong Country is not a "core" game where only a few million crazed loons like myself will play through it at least twice, talk about the philosophy of the game in Internet forums, and shun other similar titles because it does not capture the spirit of the game.
Pokemon is in the same vein as Mario. Wildly popular and a never ending phenomenon. I have played Pokemon and I will say it is a great franchise deserving of every sale.
Finally, Nintendo for these holidays is re-releasing Super Mario Bros. All-stars for the Wii. Shouldn't these games have been on the Wii online service since day 1 for $5/game? Just another way Nintendo is milking out their beloved memes and I have not heard one complaint from a Nintendo fan over this. All I hear is well, it is great!
VI. Conclusion
I am predicting Nintendo will not be #1 in hardware sales next generation and if I am wrong then laugh at me all you want, but I will admit I am wrong and will have the heart to stay. Nintendo no longer has free reign over a neglected mass market of potential gamers, their concept of multiplayer is antiquated to say the least, since the SNES Nintendo has lacked any and all quality Western 3rd party support, and Nintendo's reliance on a new Mario, Zelda, or Metroid game every two years to please what they think of as the "core" has been completely shattered with the consumer's reception of Metroid: Other M.
What Nintendo needs to do is to study why Uncharted, God of War, the Call of Duty series, Halo, the Grand Theft Auto series starting from GTA 3, and recently the Fallout series starting from FO3 have become what many consider "core' when asked, "What is the first video game title or video game series that comes to mind when you hear the word "core" or "hardcore"?" Looking at Nintendo's library in comparison to Sony and Microsoft's software library, it is front and center that Nintendo is more family friendly and family oriented in their software. Well, your 25 to 30 year old gamer who grew up on Super Mario Bros. 3 and a Link to the Past just isn't into the 20th iteration of Mario or Zelda anymore. We have aged, experienced more games, and have come to appreciate games and game franchises that are, in many ways, antithetical to Mario and Zelda. We want a new, mature IP that is as epic as Mario and Zelda once were during our impressionable years as teens and Nintendo has not delivered for a long time.
Time to step your game up Nintendo because this upcoming generation will see the Blue Ocean painted with many shades of red.