Teens tend to make up most of the buzz in the industry. Buzz is important because enthusiasm = sales.

Nintendo loses all respect in the market without appealing to the teens.

It's like Coca Cola or Nike, why do you think they appeal to teens. 1) Money or disposable income like Soundwave said, and 2) Branding and popularity.

That's untrue, and that's in the west. I'm mostly talking about japan. The west's situation with teens is completely in the wrong place right now.

The 3DS is the true story I'm talking about. It is appealing to the teens and gaining industry favor with every passing day. When MH4 releases you will see what I'm talking about.

They dominate the forums and we all know that's what counts.

That's just the U, and it was aiming at the wrong teens with the wrong games. The enthusiasm isn't there, the late games are rarely classics. The ipad/nike/coke type branding is non-existent in the teen world of videogames in the west, so it's a losing situation to begin with. Japan has another much better teen situation, full of enthusiasm.

Right now in the top 20 we have games by level-5, capcom, namco bandai on the 3DS. Games like Ace Attorney, Fantasy Life, Romance Dawn, Yokai Watch, and other games that are not necessarily aimed at kids. Though the release schedules may be smaller on the 3DS (I haven't checked), the top 20 regularly holds 3rd party 3DS games which are not child-centric.

Japan is a very different market. A market where cartoons are for adults and where a cartoonish game like Little King's Story or Wonderful 101 can have adult themes and difficulty levels because they are aimed at teens and up not little kids.

For these reasons Nintendo is not perceived as a 'kiddie' system in Japan. Cartoonish is not considered childish. So it's more at home in Japan.

The casual market is also excepting of cartoons as family fare from Simpsons to Family Guy and Mario and Miis can be for all ages.

It's the Western teen-YA market that shuns cartoony styles as childish (a rather childish attitude actually) and therefor shuns Nintendo - at least until they grow up, get married, have kids and rediscover it all over again.

In short - Nintendo's successes in Japan have little to no (direct) relation to it's success in the rest of the world.

What kind of royal teens and college students you have been hanging out with? They have far limited disposable income than you they think they do. Time is another story though as it depends on the person about where their priorities are. 

Yet the GameCube was a massive flop in Japan and something with wacky Japanese style cartoony graphics like Wonderful 101 is flopping and so is the Wii U in general. Little King Story flopped too.

Japan is different, but it's not like a lot of these products aren't having issues other there either.

W101 should sell better in North America than Japan.

I agree partially. If Japan was able to have such an influence on the western front during the NES, SNES, PSX and PS2 eras, why would the PS3 era suddenly make that no longer true?

I could be wrong but as far as I can see it the situation of the industry in the west is unstable because it lost sight of what made games good or classics.

http://www.prlog.org/10821742-16-18-year-olds-have-more-disposable-income-than-any-other-age-group.html

http://www.businessweek.com/stories/2007-08-16/teen-marketing-apples-the-masterbusinessweek-business-news-stock-market-and-financial-advice

Not only that but teenagers/college students tend not to have the greatest judgement in how they use their money. I remember one of my friends was super broke that I'd sometimes just buy him lunch, but when GTA Vice City came out for PS2, he had to have it and bought it brand new, lol. Priorities change as you get older.

There are plenty of "poor" teenagers/college kids with iPhones and a GTAV pre-order and a $150 pair of Air Jordans on their feet.