Having dug around some more behind some of these claims, it gets worse.

From OP "In basically two years, Iwata dismantles pretty much all of Nintendo's Western relationships."

The following disproves that statement.

From OP "His first major move as president? Selling Rare to Microsoft in September 2002."

Who made the first move that culminated in Microsoft taking over Rare? Rare themselves.

It wasn't Nintendo's move. That relationship with Nintendo was undermined the moment the Stamper brothers decided to sell their share of the business. They started the ball rolling in 2000, and given the time it takes for all the legal paperwork to be sorted on buyouts, it's likely Iwata took on the role too late to have any influence over it, even if he wanted to. In an exclusive interview, Tim Stamper revealed that even before the Microsoft takeover, people were already leaving Rare, and they themselves wanted out, too.   http://www.p4rgaming.com/exclusive-interview-with-tim-and-chris-stamper/

From OP "Silicon Knights is out."

No official reason was given why Silicon Knights and Nintendo parted company, but it appears from the quotes from both parties in the following link is that the decision was mutual and amicable, i.e., not a decision forced on Silicon Knight by Nintendo. http://uk.ign.com/articles/2004/04/13/silicon-knights-and-nintendo-part

From OP "Despite spin at the time that Nintendo would use the money from the sale to invest in a similar Western studio (Zoonami was thrown around a lot), this never materializes."

Despite a lot of searching, I couldn't find any of this 'spin', (if anyone can find a link please feel free to point me to it) but from what I could find, Zoonami was a small outfit of about 10 guys headed up by Martin Hollis, formerly of Rare. According to an IGN article in 2003, a Nintendo spokesperson confirmed a new partnership with Zoonami. Martin Hollis of Zoonami confirmed in an interview with Gamasutra in 2009 (which took place at Nintendo’s offices) that they had been working on a retail product for the Gamecube in 2003, but they had too much trouble with it to complete. http://www.gamasutra.com/view/feature/132396/a_convoluted_conversation_with_.php?print=1   Zoonami only made 3 games, one of which was Bonsai Barber in 2009, which was published by Nintendo as downloadable Wiiware.

From OP "Factor 5 is out".

Factor 5 never had a 2^nd party deal with Nintendo, although they were mistakenly thought to have. Their head is quoted as saying “We’ve never been a Nintendo shop.” http://www.gamespot.com/articles/factor-5-to-forgo-gamecube-development/1100-6093544/ Another employee cited the weak Gamecube sales as being one reason for Factor 5 turning away from Nintendo. http://www.gonintendo.com/s/183256-former-factor-5-employee-talks-nintendo-relationship-virtual-console-and-3ds-interest

From OP "NST is downsized to a Mario Vs. DK studio."

NST has not been downsized. There is no downward trend in output. Three out of the last four games have been Mario vs. DK, but they have non-game software projects too, the most recent being Wii Street U and Wii U Chat, the development of the latter involving Nintendo European Research and Development, and Vidyo, a New Jersey based company. http://en.wikipedia.org/wiki/Nintendo_Software_Technology

From OP "Left Field is out."

Left Field bought out Nintendo’s minority share in their company and became a 3^rd party again. It was a mutual decision after they had struggled with the development of a sequel to 1080 Snowboarding for the Gamecube, (they were warned it would be tough) as well as the effects of several employees leaving Left Field to form a new company. http://www.gamestm.co.uk/interviews/veteran-game-designer-mike-lamb-talks-life-after-ocean-software/

 From OP "- Now you may say 'b ... bu ... but Retro!', but Retro opened in 1999 was supposed to supply Nintendo with *multiple* games in genres like action/sports/shooters at once. That was Howard Lincoln's brainchild. Under Iwata, Retro is stripped down to one team and kept under an extremely tight leash where they only work on Nintendo IP."

Retro opened in 1998, and had 4 games in development. In 2000, Nintendo granted Retro the licence to work on Metroid. The original 4 games were cancelled in order to focus on Metroid. This happened before Iwata. In 2002, Nintendo purchased a majority share in Retro, and turned it into a first party developer and division of Nintendo. It continued to develop games in the Metroid series and then moved on to the Donkey Kong Country series, as well as co-developing Mario Kart 7 with EAD.  http://en.wikipedia.org/wiki/Retro_Studios

So, as you can see, rather than there being a bias against the west on the part of Nintendo/Iwata, and rather than Iwata deliberately distancing  Nintendo from Western developers, it seems to be the other way around. In fact, the only bias I'm seeing, is that of the OP against Nintendo/Iwata.

The distance between Nintendo and western developers is, I realise, a fact, not a message, but it has been used to put forward the argument that Iwata is behind the chasm between Nintendo and western developers, and that it is entirely Nintendo's fault. There is plenty of evidence in this thread now to show that is not the case.  

You don't think Iwata has anything do with this, or that there is no visible shift in philosophy here ...

N64 era under Howard Lincoln/Yamauchi/Arakawa (1996-end of 1999):

Killer Instinct Gold

Star Wars: Shadows of the Empire

GoldenEye

Diddy Kong Racing

Tetrisphere

The New Tetris

Banjo-Kazooie

NBA Courtside starring Kobe Bryant

NBA Courtside '98

Star Wars: Rogue Squadron

Jet Force Gemini

Ken Griffey Jr. MLB 

Ken Griffey Jr. MLB Slugfest

Cruis’n’ USA

Cruis’n’ World

Pilotwings 64

Waiale Country Club Golf

Command & Conquer

Jet Force Gemini

Donkey Kong 64

Blast Corps

Star Wars Episode I Racer

Versus:

Wii U (2012-end of 2015 projected):

Donkey Kong Country: Tropical Freeze

LEGO City Undercover

Wii (2006-end of 2009):

Metroid Prime 3: Corruption

Excite Truck

Excite Bots

Punch-Out!

BWii2 

Mario Strikers

Then I'll just say ... we'll agree to disagree. I don't buy the narrative that Iwata is the poor vicitim here or this happened unintentionally under his watch. 

The fact is Nintendo should have even MORE Western developed games today than even during the N64 era. 

Between 2000-2001, the N64 would recieve another 8 Western developed games from Nintendo or tied to Nintendo, so in those dying years of the N64, it received the same number of Western developed games than the paltry eight we can list for the Wii + Wii U combined. 

This was an interesting read, but it's really quite horrible and smacks of being a conspiricy theorists.  THe reason I say it's horrible, is because it's lies.

First, Nintendo didn't sell Rare.  The founders of Rare sold their shares to MS, giving MS 51% control, so Nintendo really had no choice but to sell their 49% stake.  Yes, Nintendo could have bought it, but it would have been stupid.  Rare primarily worked on NIntendo IPs, and most of the talent had left the company by the time MS picked it up.  Do seriously think anything made by Rare since being bought by MS would have helped NIntendo?  No, I didn't think so.

Retro was made to be a replacement for Rare.  It started making 4 different projects, but the problem is modern game development takes way more resources.  When they started Metroid Prime they needed to combine all staff to make it happen.  Retro is about the same size as Rare in its prime, the problem is 100 guys can't make a game a year anymore.  But Nintendo's investment in the West is the same.

Further, the relationship with Nintendo is very similar.  Shigeru Miyamoto worked heavily with both companies.  Both companies had their best success with Donkey Kong.  Both companies WANTED to make Donkey Kong because they could get the most sales that way.  I'm sure Retro would make a 1st person shooter and a few other titles too if they could do it all with 100 guys.

Second, the other second party partners chose to work on other systems because the GC didn't sell well.  Simple as that.  Also, their titles were mostly irrelevant.  They didn't push the Gamecube at all.

Third, Nintendo didn't partner with Activision on Skylanders because they wanted to make their own.  Depending on how Amiibos do, that could be a very good decision.

Now, having dismissed your primary points, lets look at some major things you have missed:

The Wii.  Iwata's greatest success stems from a partnership with Gyration Inc, of Saratoga, California, USA.  Gyration had demonstrated their tech to both Sony and MS and were rejected.  When it was presented to Nintendo, the company heads disputed greatly its value and it was Iwata himself who stated they would be using the tech. It was one of Iwata's first major moves after being anointed by Yamauchi to lead the company.

Zombie U.  Bundled, packaged and promoted heavily outside of Japan as a killer title.  Yes, this is a western, exclusive title.

NoA has power - at least as much as always.  Case in point, it was Reggie's call not to bring over Xenoblade.  A mistake, and probably one of many reasons Iwata took over (and said more titles would be translated).  I think it's less about power in recent years and more about lack of competency. 

Retro has expanded under Iwata.  Significantly.  More staff (including talent from other American devs., new larger building, now capable of doing two projects at once.

All that said, Iwata has not done enough to attract the Western audience.  He has been slow to exploit the money made off of Wii and DS.  Retro is great, but there should be 2 or 3 more studios making games.  He should have bought someone like id or Vigil or set up a new studio in the UK with old Rare talent.  He didn't and should.  They should have more skilled people at NoA making key 3rd party deals, etc.

But none of this indicates a bias on Iwata's part, only lack of leadership.  Nintendo is no more - or less - anti-west than they have always been.

The N64 list versus the Wii + Wii U list would say otherwise, Nintendo's Western production has crawled to a practical stand still. 

Whether you want to call that bias or lack of leadership ... IMO, it's just semantics. 

Also looking at Nintendo's Wiiware, DSiware, eShop output ... it's basically the same story. Nintendo has like 60+ games in this category and maybe all but 5 or 6 are developed in the West. All the rest are Japanese funded studio titles (about 90%+). 

Nintendo would never invest in a studio like Vigil or give NOA more autonomy or setup a new Rare-like studio in the UK. You guys need to understand this is not accidental oversight, Nintendo does business in a very set way. Maybe with the Wii U failing so horribly and the 3DS losing market/mindshare to tablets/phones like crazy Nintendo may finally have to realize they need to wake up, but right now ... I doubt it. 

Retro not being expanded years ago is also not an accident, which how some people try to frame it. 

The company Nintendo is today is not by accident, it's the company that Iwata and the higher ups on the board of directors wanted to have. They want Nintendo to be largely one of basically 90%+ of their development being done in Japan and very tightly controlled minority Western development under a fairly set section of rules -- no Western developer is allowed to make an original IP, they work on Japanese character properties (IMO the ones Japan is too busy to work on themselves), etc. All I'm asking is if this setup makes any logical sense in an industry where 80%+ of all games sales are now in Western markets.

Not coincidentally the only Western developed game that Nintendo has had under Iwata's reign that's been a huge break out hit is Donkey Kong Country Returns ... which is obviously a direct throwback to the SNES days of Rare. Every other 2nd party project has had fairly mediocre to modest sales success whereas in the 90s Howard Lincoln and Minoru Arakawa were able to deliver several solid performers for Nintendo from Western developer relationships. 

It should also be noted a lot of what's being said about Rare is actually false here.

Nintendo DID have the opportunity to retain Rare if they wanted to. The Stampers gave Nintendo the first option. Nintendo is the one who refused to buy the Stampers share of the company and continue their exclusivity agreement.

After that, a period followed where the Stampers were looking for a company to take over Rare. Activision was in on the bidding. 

Microsoft simply offered the most money but their offer did not come into the picture until 2002. The rest is history.

http://ca.ign.com/articles/2002/09/20/official-nintendo-ends-relationship-with-rare

http://www.rarefandabase.com/exclusive-rare-microsoft-ten-years-of-games-and-controversy/

BTW, that Rare interview that people keep linking to from the Stamper Bros. is FAKE from a parody site. 

Personally I honestly think this was a bad deal for Nintendo in the *long run*. Even though they got approximately $180 million from MS for the sale, I think Rare's output in successive years could earned Nintendo more money and covered them during damaging drought periods.  

Assuming that say Banjo-Kazoowii, Perfect Dark Wii, Donkey Kong Country, Diddy Kong Racing 2, and the other stable of expected Rare games came out on Wii + DS, I think it's fair to say they could have sold 15 million copies (Rare sold like 30 million between DKC and GoldenEye alone, lets assume that declines though but they still do OK with the big Wii/DS userbases), at say $15 profit per copy for Nintendo, that's $225 million in profit from that gen alone. 

I don't think it was the slam dunk deal a lot of people paint it out to be, it turned out IMO to be lose-lose-lose for all of Nintendo-Rare-MS. A lot of Rare's IP would've sold well on the Wii and DS IMO and the added development size would've helped the 3DS and Wii U immensely too. 

The end result is Nintendo is willing to fund tons of Japanese developed projects, but not very many Western developed projects at all. 

I dunno, maybe bias isn't the 100% the correct word, but it's probably not far off either. 

I think that's a reach. Iwata is fully in control along with a few other select higher ups at Nintendo's board (Miyamoto, Takeda). 

Never once in his 12 years at Nintendo have I ever heard Reggie state or mention that he has any ability to greenlight actual game projects or decide to expand a studio. Ditto for anyone at NOE. 

NCL controls all that. NOA/NOE are just puppet distribution centers nowadays. Iwata could've expanded Retro when ever he wanted to. Could've done it in 2005. 2006. 2007. 2008. 2009. 2010. 2011. Nope, nope, nope, nope, nope, etc. etc. etc. 

I think Purple's theory is right -- Iwata is a micro-manager. I think some of the NOA president thing is also corporate politics -- if there's unrest among Nintendo's investors, Iwata can "step down" or demote himself as president of NOA and say "see? I demoted myself, now give me another 2 years to turn things around". It's a pretty shrewd tactic actually, because it's not like NOA had any real autonomy anyway. It's a position he can use as a sacrifical lamb to step down from if some factions of the shareholders become too unahppy with him (which might happen if say ... that Quality of Life thing flops). 

Quote as many lists of games as you like, they are only symptoms of the various breakups in partnerships. (Some corrections to the list have been made, nevertheless)

However, the issue here is that you claimed in the OP that those various breakups in partnerships is down to Iwata/Nintendo bias against western developers. Hell, just look at the topic title. Did you actually read any of the links I put in my post? Evidently not, because in them is a slew of evidence proving that it is not down to bias as you have tried to claim.

I think you are forgetting what Microsoft was in the early 2000s. Bill Gates was the guy who would appeared every eyear on magazines as the wealthiest man in the world, Microsoft was in their prime back then.
Meanwhile, Rare was "bought" by Nintendo around 1994, when Nintendo was the top dog of the video games industry, but it was surpassed greatly by Sony in the late 90s, and in the early 2000s lots of people wrote about how Nintendo wouldnt be able to compete with the big boys Sony and Microsoft.

I am sure that Rare sold themselves happily to Microsoft because:
1) Being desired by the wealthiest man in the world and the most important company in the world felt great, probably a great boost to their ego
2) They thought their future would be safer under Microsoft than under Nintendo, no one imagines Nintendo would get a stroke of luck and win a generation against those huge companies.

Something else, Nintendo probably saw Rare as less worthy once the first person shooter talent left the company, because it was them with GoldenEye that really sold a lot of n64s. Nintendo of Japan needed Rare for that, not for Banjo Kazooie.

I think Nintendo doesn't like to buy western companies because they don't like something which is common in western companies, which is the high rotation of workers because they quit and create their own company or go work somewhere else. In Japan people work for the same company till they die.

The Star Wars deal was due to NOA negotiating a deal with Lucasarts, one in which they actually beat out Sony:

http://lubbockonline.com/stories/110498/LF0065.shtml

I consider them basically 2nd party games, yes you could play them on PC.

Factor 5 also had direct help from Nintendo, for example Rogue Squadron was the first game on the N64 to use the Expansion Pak, even before any of Nintendo's Japanese games were using it. Every Factor 5 game made under the LucasArts/Nintendo was console exclusive to Nintendo with Nintendo having distribution rights and even assisting with development. Factor 5 even helped develop some of the dev tools for the GameCube. 

Even Indiana Jones & The Infernal Machine was N64 exclusive on consoles (Factor 5 developed). 

If we're including the full generation of Wii + GCN titles, then you need to include the N64 for 2000 and 2001 too, which adds

Perfect Dark
Excitebike 64
Starcraft 64
Banjo-Tooie
Ridge Racer 64
Mickey's Speedway
Conker's Bad Fur Day
Star Wars: Battle for Naboo

To the N64 side. That gives the N64 more than 30 Western developed games, which absolutely dwarfs their output on any of the GameCube (which still had projects in development from the Lincoln/Arakawa era) and certainly the Wii and Wii U where 90%+ of Nintendo's production is from Japan.

It's kinda crazy to remember that at one time Nintendo was working and financing games like Starcraft 64 and Command & Conquer 64 on their own ... today could you imagine them bringing say Diablo to the Wii U? No way, lol. 

I can buy one or two relationships fizzling out, but all of them? And most of them really not replaced in a comparable way? That I don't buy. To me that's a concious decision on Nintendo's part. 

I wonder what their future in the market really is if they continue on the way they are structured now because I don't think a console made up majority Japanese games will have big success in the West again (which is basically entire console business). 

GameCube still had OK Western support until about 2004 but it definitely felt the pinch of not having Rare + a GoldenEye type hit to drive hardware sales. Then it drops off a cliff. Wii U has the least Western developed Nintendo games of any recent Nintendo console. Shockingly it's also by far the lowest selling Nintendo console in North America out of the gate (whoda thunkit).