Nintendo is a great company, but people simply don't need Nintendo, neither do publishers anymore. Sony and MS basically fulfill all the needs of the wider market today.
If the NES and Super NES gave away all their third party support to the Sega Master System and Sega Genesis/Turbo Grafx 16 (talking about things like Megaman, Final Fantasy, Castlevania, Ninja Turtles, Street Fighter II, Wizards & Warriors, etc.), they would have lost both of those generations too.
The Sega Master System *is* basically what Nintendo has turned themselves into -- great 1st party games, but not much in terms of third party support, that was all on the NES, and the NES destroyed Sega as a result.
Wii was a one off thing that I (and many others) don't think they could repeat.
When people put down $200-$400 for a console, they don't want a "specialty" console, they want a console that gives them access to the wider variety of content. Same thing when they buy a video format (VHS or DVD or Blu-Ray) ... they want something that lets them play all the movies they want, not just the movies Disney makes for instance.
It's nothing personal to Nintendo, Nintendo's formula simply isn't the one that people want. The other issue too is they continue to pound the "family console" concept of gaming, and that's one that even a lot of kids don't like ... they don't want the "mommy approved console" they want the one their older brother is playing. Whereas Sony/MS' approach is to target 17-25 year olds first and then target other demographics second, that simply works better. Nintendo's approach was good for the 80s/early 90s when the game industry was much more tied to the toy industry, but it "grew up" since then.









