Here's some context from what people in Japan (translated ) are saying about this issue. Unless of course you guys think the Nintendoom conspiracy has managed to make it there as well.

(from Zefah, gaf poster):

I feel like I'm harping a bit too hard, but too many people trying to interpret it another way will derail the conversation. For those of you who have some understanding of Japanese, just take a look at how the quote is being discussed on Japanese discussion boards instead of checking it with your other non-native Japanese friends.

Here's a good one: http://jin115.com/archives/51999684.html

Jin's little ASCII art commentary:

＞子どもたちへのアプローチ

子どもたちへのアプローチするのはいいんだけどさ
そのゲームを買うためのお金を持ってるのは大人だよね
あ、そっか大人はWii　fitやるからいいのか
じゃ、よゆーで立て直せますね！　よかった！


Some comments (and rough translations for those who don't read any Japanese):

あれ？
コアゲーマー狙いは？
What happened to focusing on core gamers?

ガキばっかり見ててもロクな利益でないだろ
Focusing only on little kids won't amount to much profit.

ガキをだませば儲けられる・・・マジでそう思ってるんじゃね
He really thinks he can make money by tricking kids, doesn't he?

え？子供たちしかみてなかった気がするけどｗ
Huh? I got the impression they were already focusing ONLY on kids.

もっと子供から搾取します！
Time to exploit the kid audience some more!

今でも十分ガキ向けだろうがボケかますなよ
こりゃゼルダもメトロイドも零も絶望的だな
What a dumbass. They're already focused enough on kids.
There's no hope for Zelda, Metroid or Zero (Fatal Frame) now.

子供へアプローチしたいならタブコンを捨てろ
If you want to focus on kids, get rid of that tablet.

こういう子供にターゲットを絞る、みたいなパイを小さくしちゃうような発言って株主はどう思うんだろうか？
I wonder what their shareholders think when he says they're going to tighten their focus on an even smaller part of the pie like the kid demographic.

子供特化はニシくん切り捨てるってことだけど
まぁ元々声だけでかくて購買力はないから別にいいのかなｗ
Focusing on kids means they're going to have to drop the Nintendo fanboy audience.
Not like it matter. Those guys have always just been vocal despite not buying much anyway.

あれ？Uのときのコアゲーマーガーはどうしたの？
Wasn't the Wii U supposed to be about core gamers?

コア取りに行く発言とは
一体なんだったんだ
ちん○頭
What was all that talk about going to get the core gamer?
Dickhead.

原点に戻ってトランプ作ろう
They should go back to basics and make playing cards!

その子供も日本では減少傾向にあるんですけどね
Problem is that there are fewer and fewer kids in Japan every day...

見た目は大人！頭脳は子供！なら沢山いるんだがなｗ
There are a lot of people out there that look like adults but have the brains of children...

これから更に子供向けに・・・
もう任天堂ハードには何も期待できない
They're going to become even more focused on kids?
My expectations for Nintendo hardware can't go any lower.

でも既にポケモン出しちゃってるしね・・・
But they already released Pokémon

子供に売れないベヨネッタ２とかこの先どうなるのやら
Wonder what's going to become of Bayonetta 2. Kids won't buy that.

子供向けを理由に手抜きのゴミゲー乱発してるからこんなことになったんだろうが
The reason they're in this position in the first place is because they shit out a bunch of garbage games.

岩田！　ミニゲームだ！！
Iwata! More mini games!

要約すると、買わない豚になど微塵も期待していない、出来ない
と言ってるんだ
What he's really saying is that they aren't (and can't) count on Nintendo fanboys anymore.

そもそも任天堂はSCEやMSとは別世界なのに、
同じ世界の住人のように振る舞う人たちがいた（WiiU初期における任天堂自身も）。
その誤りが終わるのであれば、それはもう素晴らしいことだよ。
Nintendo is in a totally different world than Sony and Microsoft.
When the Wii U was launch, there were people who pretended that wasn't true (even inside of Nintendo).
As long as that mistake is ending, I couldn't be happier.

子供へアプローチすんのにモンハン強奪する意味がわからんのだが
If they're trying to target kids, I have no idea why they tried so hard to steal Monster Hunter.

Just some examples. Seriously, no one is interpreting it the opposite way, nor should they, because that would be odd.

That translation sounds so wrong. lol! XD

Gaf translators are saying:
"we did not do enough to attract children" and
"Our approach to targeting children has been inadequate" and also
"We haven’t been targeting children enough"

are all accurate.

I would love it if Nintendo went hardcore, I love rooting for the under dog :) part of my love for Sony last gen was that they were the under dog.

Man, I should've gone into translating Japanese as a career. I could've made a fortune by the looks of this.

Does this mean theyre totally gonna go balls to the wall with "mature" content?

It means they'll be making more games specifically for children.

I think it's not about the number of games. (I haven't actually read or seen what he said...)

In my opinion he probably means that they couldn't reach their target group (the children) enough, in short: They probably didn't do enough advertising. While there are a lot of games, they failed to communicate the existence of those games. I think that's what he means by saying their approach was lacking.

I knew it was but its too late to point it out now. The truth is meaningless to the haters. All they care about is having a reason to justify their hate and sites have given them that

See this is exactly my point. Even after having what was actually said pointed out. Someone refuses to acknowledge it and is still trying to spread that lie as if its truth. No dude dont let the truth stop you.