Nobody wanted limited versions of console franchises either. At least niche japanese titles are likely to make money, probably the better option.

Did the vita focus too much on niche titles?
No, it focused on being a home console in your pocket and failed dismally at it. At least the niche Japanese devs were nice to enough to show their support and make a nice profit off of Sony's last handheld gaming console.

The question is wrong, because Vita didn't focus on niche titles. Niche titles focused on Vita, as they saw an opening for good sales due to lack of any other content on the Vita provided by Sony themselves.
Ultimately, without those Japanese titles, Vita wouldn't have sold even this much, and would have been pinned to the bottom of the sales charts, even below Wii and PSP.

Ultimately, Sony lucked out from niche support. But I don't see that support lasting much after 2015.
2016 will most likely be the year of Vita's death...

I think Vita probably just focused too much on being an awesome system for gamers and the world just wasn't ready. :D

It basically focused on everything that the western market didn't want or cared for

I think Sony just didn't focus enough on it...

You mean a handheld without Pokemon =P

The Vita focused too much on port after port. Very little is niche about it. Sony is constantly bragging about it being an indie machine and being indie isn't niche it seems.  Seems everyone and their mother loves shitty indie games more than well developed games that have some sort of budget behind them.

All of the first titles made by westerners sold very poorly, so they quickly abandon the system. The only western studios working on Vita now are indies. Japan is the only real market for the Vita, so it's natural Japanese-themed games are so prominent. All of the budget titles (at least by comparaison) are made by japanese studios, so the system only sells well in Japan. It's a vicious cycle.

Besides, It's better having a decent library of niche titles than nothing at all.

Vita tried to market itself to adults who use public transportation and want a home console experience. Not realizing that if you're an adult that has money to waste on a Vita then you have a car already and a console in your home.