That is definitely a necessary step too. Nintendo needs to be *ready* to support their onw consoles all by themselves. In the future, this will be easier, as they are aiming to have cross-compatibility amongst their platforms. Once they have achieved that, then the "splitting" of their limited resources will no longer harm them, as all games will work on both sides more or less (except for games really tooled to the console or handheld experience, i guess.)

Now is the time to buy up troubled-but-talented mid-tier studios before that breed dies out entirely, or invest in promising indies. Realistically, the *necessary* output capacity is only 12 significant games a year, with only half of those (at most) being really big blockbusters (there seems to be something of a conceit among Microsoft and Sony fans that their consoles just receive hit after hit due to third party support, when most of these games aren't that big in the grand scheme of things).

Essentially, Nintendo is already making the right number of blockbusters for the Wii U: the big, console-pushing (at least they are intended to) titles. What Nintendo needs more of are the "sustaining" titles that fill up the gaps, so to speak, and these could be made both more budget-friendly and filled by many different kinds of studios on a tighter production schedule, without having to worry about what third parties do or (more likely) fail to do.

That's fine, Nintendo can do business how they wish, but so can everyone else.  It's not even as much about throwing money as it is about establishing a partnership.  Business isn't about favors, it's about doing what is best for your company, period.  Sony and Microsoft have always worked harder to make their partnerships as mutually beneficial as possible.  That is what third-parties like and I do not blame them one bit.

Quite honestly, most companies that do business the way Nintendo does business fail.  They owe their very existance to the quality of their software.  Their game development studios save their ass.

Well it worked for 30 years so I am pretty sure that it's a solid bussiness strategy. Owning your very existence to the quality of your software and surviving for 30 years is not failing at all. Depending on others to further improve your bussiness is a shakier bussiness model.