lol of course they do.  They need the licensing revenue.  They need the genre diversity.  They need the games to fill in the gaps between their own releases.  They need a larger and expanding audience to sell to.  They need the consumer mindshare and retail presence throughtout the whole year.  3rd parties bring all of these.  No console maker can survive on their own, and frankly, there's no point to either.  

It's a bit late now, but what they SHOULD have done was intervene to make sure Wii U ports were technically up to scratch, like how MS stepped in to make Diablo 3 on Xbone 1080p.

wow. I'm amazed that a single person can be that heavily biased.

1) Handhelds are a different market and in the past have had less competition.

2) Handhelds are cheaper to develop and quicker to develop for, meaning higher margins and more games out in a shorter amount of time.

3) Their handhelds still have had a large selection of 3rd party games in the past.  The 3DS still has some Japanese titles. 

Their consoles have always had some semblance of 3rd party support (their weakest having the least), and the majority of software sales on the Wii were from 3rd parties.  The Wii is exactly what I'm talking about when I say Nintendo has to establish the audience and 3rd parties will follow.  Their success with motion control and the likes of Wii Sports, Wii Play, Wii Fit, Wii Party, and Nintendo's appeal to kids brought in gamers and games and made the likes of Deca Sports, Carnival Games, Game Party, Zumba Fitness, EA Active, Just Dance, Skylanders, Disney Infinity, Lego games, etc succeed so well.  These games help carry momentum, spread positive word-of-mouth, instill retailer and publisher confidence, and provide a ton of licensing revenue for Nintendo.  

This is what they need, and what they are not getting with the Wii U.  They haven't got any sizable market onboard beyond their own fans, so 3rd parties have no one to sell to, which is exactly why 3rd parties can't make any money.  It doesn't go both ways here.  Right now, beyond the couple of IP aimed at kids, the 3rd party console market is mainly geared at the teenage-20s male audience, so I'm assuming that's the types of games this topic is addressing. 

Bingo.  Think about it, why be a platform holder if you don't need licensing revenue?

Hardware is a very low margin business, or in video games a loss leading business.  The reason to be a platform holder is that everybody has to pay you to sell their games on it.  If they don't want / need licensee revenue and they just rely on Nintendo games for profit, it would be better to go 3rd party and not bother with their hardware platform.

Since they are in the platform business, they absolutely need 3rd party to increase revenue and to increase sales of their platform.

The point I did not succeed in doing, I was not trying very hard really, was that:

Nintendo, much like Disney in the eighties, is so heavily relying on their iconic franchises that they fail to see what Third Party can contribute with. They flood their systems with franchise games that their fans crave. Problem is that not everyone is a nintendo fan.

Coming into the eight generation Nintendo tried to make a deal with EA. Despite having the successful Wii/DS generation behind them, someone at Nintendo sensed that they could not succeed again whitout Third Party developers. We do not know what happened - my guess is that Nintendo failed to see what EA could contribute with. They valued their own IPs to much to recognize EA expertise in games for a mature audience.

Well here we are, they will try to get to the mature audience themself but the only way that they know how to do it is to throw in Zelda costumes in Bayonetta, Zelda costumes in Warriors, Zelda chickens in Devil's Third, colourful squids in Quake MP (could have been Mario).

Sure, if their platform is a best seller then they are saving tremendously by owning it themselves.  On the other hand if their platform is selling tremendously bad, they have a giant opportunity cost.

Let's say they could get 100% attach rate on a game for simplicity.

- On Wii U they would get 5.9M x $35 per-game =  $206.5M (saved $41M on licensing)
- On PS4 + XB1 they would get 14.5M * ($35 - $7 licensing) = $406M (opportunity cost of being exclusive)

The opportunity cost of exclusivity is 10X higher than what they have saved on licensing costs by owning their hardware.

Ohh the irony... you actually really wrote that...

No.  What I'm getting at is that they can't be successful without appealing to a broader market.  Appealing to the same Nintendo fans with Mario and Zelda isn't going to do anything to widen your userbase or attract 3rd parties, as they primarily develop for a different audience.  And without them, it's pointless being a platform holder. 

That's the reason why I mentioned the Wii.  Nintendo aggressively targeted a different, larger, more-casual audience which found them (and third parties) tremendous success.  It works in tandem.

Again, third parties are not losing anything if there are no signs of a potential audience.  Them developing a single title and releasing it is going to do nothing to attract a market that's currently not on it.  Those resources used would be much better spent developing for a platform the audience is on.  It's up to the platform holder to design, market, and cultivate an audience because they control the most powerful message.  Just for an example: Ubisoft could release AC, Activision could release COD on a Nintendo system in November- but if Nintendo's primary games on the system are Mario this and Mario that, and the main marketing they've chosen is aimed directly at kids with Nintendo games, Amiibo, and Disney Infinity, those games are going to sell next to nothing.  There is a clear audience mismatch and the third parties can do nothing about it.  Nintendo controls the message of the system. 

Doing a better marketing; Offering deals/discounts.