This is NOT a question of quantity over quality or vice versa. You can look at it as a balancing act between quantity and quality if you want to, but that's not quite right either.
The right way to look at it, is Nintendo needs to get the highest VALUE out of it's development resources. The VALUE of games is determined by customers, and Nintendo must gauge how much value for customers they are creating for the amount of development resources they are investing, and focus on the games that rank highest in that regard.
A game like Brain Age represented a great value for the resources invested. It was developed by only a few people over the course months, not years, and they sold many millions of copies for a mid-range price. Meanwhile a game like Smash Bros. required a large team over several years, but they still sold a huge amount of games at a high price. If you think of things as balancing quantity vs. quality, it sounds like those types of game development cycles are pitted against each other, but if you think in terms of value, those games are both on the same end of the spectrum.
Modern Zelda and bargain bin shovelware titles are together on the opposite end of the spectrum. Zelda requires an investment of resources even beyond what went into Smash Bros., and it will sell a fraction as many copies even if the price is slashed several times. Meanwhile if they developed a ton of bargain bin titles as cheaply as possible, they would start at a cheap price, get cheaper, and never sell much. We can think we're really clever by observing that Zelda requires a lot of resources, and the bargain titles require very few resources, but the real world is the world of customers, not developers, and in that world, the last Zelda game, Choo Choo Zelda, ended up in the bargain bin.
"[Our former customers] are unable to find software which they WANT to play."
"The way to solve this problem lies in how to communicate what kind of games [they CAN play]."
Satoru Iwata, Nintendo President. Only slightly paraphrased.
