The problem really isn't with the sheer number of games. Expecting one company to make up for no/crap third party support is simply silly, one company cannot fill the role of what 150+ different developers bring to the table.
That's just the bottom line to it, even if Nintendo doubled output, they would still lack in diversity compared to what Sony/MS offer.
People buy consoles as a format (like DVD or Blu-Ray) and they want wide ranging content, not just speciality/niche formats.
It's like building a basketball or hockey team with only one really good player and giving him no help. You won't win many games no matter how brilliant the one player is.
If you flip flopped the NES and Sega Master System's third party support, so the NES basically was just Nintendo games, the NES would've lost that generation to the Sega Master System too. They've over the course of the years went from the no.1 third party backed platform and turned themselves into Sega of the 1980s ... a great 1st party publisher, but the mass market won't be a niche library of games.
Even in the 80s when the NES was the defacto numero uno, most people acknowledged Sega themselves made some killer games (playing them in arcades was evident enough), but no one would choose a Master System over an NES which had way more games.
