Your assumption that the "casual crowd" doesn't want to buy dedicated hardware anymore is solely based on the sales of the Wii U and 3DS. But these systems suck ass, having hardware features that don't come anywhere close to justifying their higher price tags compared to the previous generation on top of being features that the market clearly doesn't want (so price cuts won't change the trajectory). The only redeeming quality of these systems are Nintendo games, otherwise they would have been dead in the water within a year of launch. Your analysis is a lot like concluding that nobody wants to buy Super Mario Bros. anymore, based on sales of the Nintendo 64 and GameCube. It's pretty hard to sell things that don't exist in proper form or don't exist at all.

Also, iOS and Android own nothing. When has there ever been a complete control over consumers in the video and computer game space? Additionally, playing on one device doesn't rule out playing on another device. Furthermore, it's simply not feasible for iOS and Android to completely satisfy someone like the Wii Sports fan because there is nothing comparable on those devices. And that right there is the catch and the reason for Nintendo success or failure; the Wii U is a rejection of the Wii spirit, highlighted by the different standard controllers for each console. The Wii could thrive regardless of what other companies did, because it couldn't be substituted. On the other hand, the Wii U is a worse PlayStation or Xbox thanks to its lackluster third party support. It doesn't matter that the Wii U is backwards compatible with Wii controllers, because everyone with half a brain knows that games won't be tailor-made for the Wii Remote in such a setup. But even if such games were made, it's outright insulting that people are forced to buy a new console for games that could have all been on the Wii they already own. That's why Nintendo gets the middle finger from consumers.

Your suggested best course of action is a trap that businesses commonly fall in, because it looks like the safest path. Focusing on your best consumers isn't a bad idea on the surface, but ultimately you are cutting off the pipeline for new consumers while your existing pool will most likely shrink with each passing year. You know, that's pretty much the reason why there is a continual decline in home console sales for Nintendo, because they kept going down that safe path. The exception to that trend is the Wii, but it's an irrefutable fact that for that console Nintendo took deliberate steps to open up the pipeline for new consumers.

So my suggestion is the creation of devices that can't be substituted (this includes with each other) and are easy to understand. You get the existing consumers on board by making sequels to established IPs, you get consumers of other devices on board due to the unique appeal of your hardware, you have the potential to create new gamers because now people might finally see something that interests them. Now how does Nintendo accomplish this?

In the handheld space, Nintendo is the only one left in town after Sony's exit. So by being a portable gaming device with physical buttons Nintendo is already in a unique position. What they have to do though is eliminating unnecessary things; something like stereoscopic 3D is a big no-no. And, of course, they have to put out software that possesses traits that can draw in new consumers. Being the only one doesn't mean much when there are no fresh new IPs.

In the home console space, Sony and Microsoft are very predictable. Dual analog controllers, gritty games, online multiplayer focus. The only other thing to keep in mind for Nintendo is that they have to avoid self-sabotage. There is an abundance of sales data, so they should have a good idea of what type of software is able to gain traction and reach beyond the consumer base they currently have and what type of software is time-consuming to make, yet doesn't shift hardware.

Well, no, those games wouldn't have had the same impact the second time around, but why should we restrict this hypothetical scenario to Nintendo pumping out only sequels instead of continuing to evolve? Not sure how anyone could think that the availability of smart devices in 2005/06 could have stopped the Wii success. As I've repeatedly pointed out, they simply don't work as substitutes, hence they wouldn't be able to challenge Nintendo. Even the DS wouldn't have been threatened much despite smart devices having touchscreen interfaces, because there is the first mover advantage in entertainment. That's why iPhone/iPad continue to persist in popularity despite numerous other companies entering the same market segment; and in this case we are talking about mostly technological competition while when it comes to games, simply offering better technology doesn't give you an automatic edge because video games are content driven. Remember how the PS3 plus Move fared. The difference between Apple and Nintendo in their respective fields is that Apple stuck to their guns while Nintendo voluntarily gave up their advantages, hence the different fortunes of these companies.

Wii was a success because people perceived Nintendo's software as high quality. This is easy to verify by looking at the Wii bestsellers list that is dominated by Nintendo games while third party clones didn't come anywhere close to matching Nintendo's heights. Part of that can be attributed to Nintendo's first mover advantage on the software side, but it's just as important that Nintendo games were of higher quality. It's very arrogant to claim that the "casual crowd" has no quality standards whatsoever. And again, your argument that they don't want dedicated hardware anymore is based on the failures of the Wii U and 3DS.

The type of games that bring in new consumers are ones that are easy to learn, but still offer substance. Dual analog controllers, gritty games, online multiplayer focus; these are the things that Sony and Microsoft do. What's vague about that? It means no dual analog controller, colorful games, offline multiplayer (competitive and co-operative) for Nintendo. The people who look down on the "casual crowd" always equate games for them with minigame compilations and the rest that you mentioned, but somehow the likes of Mario Kart and Super Mario Bros. don't count. Zelda could easily be transformed into a multiplayer spinoff with different classes and a basic level up system. Think of a mix between Four Swords Adventures and Hyrule Warriors: Four players, top-down perspective, no lame puzzles and thus focused on combat where the players help each other out with their different abilities. Doesn't need more than a d-pad and a few buttons to be played, but it would be awesome. That's the kind of stuff that put Nintendo on the map in the first place.

Also, motion controls aren't a dead end. When did sales of Nintendo games go down? It was in 2011 and after. When was the last time Nintendo made such games? The year before (Wii Party), but the more significant one (Wii Sports Resort) was a 2009 release. Sales decreased because supply of new content dried up; that's what happened, not people losing interest. And even if other companies would try to dabble in motion controls, their ability to compete with Nintendo quality is in serious doubt. Furthermore, trends come and go repeatedly in entertainment, so a down period doesn't necessarily mean death for an idea. Even if we assume that the audience has grown tired of motion controls (which we shouldn't, because the real cause for the decline is that Nintendo stopped making such games), by late 2016 it will have been already more than half a decade since the previous boom. After a hiatus things can easily feel fresh again, especially if previous shortcomings are cleaned up.

Obviously, the Wii U will continue to sell at some rate throughout it's lifespan, but I can't help but wonder if November 2014 was the month that officially confirmed that the Wii U basically reached the limits of it's market saturation in the entire world. 

1) Yes, gaming got devalued by free games overall, but you understand that the free and low priced options can only really cut into the success of higher priced games that are similar, i.e. when the lower priced options work as substitutes, right? Everything that can't get substituted with free offerings can still thrive at premium prices.

2) You should consider the release timing of all those games you mentioned. For example, your 2009 list has only second half of the year releases, meaning that the entire first half had nothing worth of note; that's where the year over year decline comes from, a damning software drought that killed momentum. 2010 is similar along with the lineup having less system-selling power to begin with. 2011 was atrocious; I mean, the minigame compilation Wii Play Motion is the only game in your list that released before November of that year. But despite all of the aforementioned things, each of those years recorded at least 11m of sales. It's perfectly reasonable to suggest that a more consistent release schedule along with a continued push to create new IPs would have resulted in higher Wii sales in each of those three years. Think about it, the Wii managed 11m in 2011 on the back of an awfully sparse lineup; the appeal of the system was far from dead at that point, but Nintendo made it dead by scaling back support in order to prepare for the ill-conceived Wii U.

3) Now you are changing what the point of contention was. Let me remind you: You believed that the best strategy going forward is to cater to existing consumers that bought Wii Us and 3DSes and give them what they want with the follow-up systems. I disagreed with that because it's very likely going to lead to a continued erosion of Nintendo's consumer base (historical trends point that way), so my task was not to lay out a strategy that matches or exceeds Wii and DS levels of success, but one that beats your suggested strategy that would top out at a Wii U+3DS level installed base because Nintendo would be looking inwards with (virtually) no thoughts lost on increasing their consumer base.