Very good points and I think I agree with both of you. If your value proposition is based on technology enchantment and high-budget production and scope your game will be outdated in 2 or 3 years. Sony stratey of selling a gaming for less than needed  only to increase numbers for bragging rights also makes sense, however I lowkey want Nintendo to make the same for their titles. I think most people would give their smaller IPs a chance if they got discounted

Sure Animal Crossing absolutely don't need a pricecut, but I can't see why Astral Chain can't be sold at 40 USD, it will take a while to reach 2 million and is a new IP. More people would give the game a chance if it was discounted. 

Problem is the discount approach impacts the returns a game can make, Astral Chain selling 1m at full price likely made more than what some games made selling 3m at bargain bin prices that for Nintendo is more key than numbers being a solely gaming focused company this is why they have discounts as part of their online subscription because they still make up what they lost from reducing the price.

It's a new franchise, it's more important to be know for as much people as possible in order to break a niche. With only 1 million sold I think it will hardly have an anticipated sequel 

It's better to have a consistent fanbase than a flash in the pan moment all of Nintendo's franchises started this way and built themselves up over time through the brand's reputation for quality. The 1m who bought it with out issue will likely stick with with it much like the Metroid fanbase have with their series and Xenoblade has shown the growth not only happens with out what you suggest but it's more organic growth that is consistent in the long run, dropping a game to bargain bin prices also doesn't guarantee sales look at the original Bayonetta when it was on PS3 and 360 it only manage 2m total at those prices the second game with less sales made more money that it.

This is why it's best they stick to their approach because for all you know you can drop prices and it'll only sell to the same people who would have bought it anyway.

They keep selling, but at a smaller scale because they’re smaller games from a commercial perspective.

The pump and dump approach employed by EActubi and other third parties is a large part of why games that sell "only" 5 million copies can end up being seen commercial failures. They're heavily dependent on massive first week sales because their products, other than annual multiplayer-focused franchises like Call of Duty, generally don't have long legs and they don't make as much money off of people waiting for the games to hit $20 or less because the game is an "old" game, or the people waiting for a "GOTY edition" with all the DLC included. If you treat the games you make like disposable products, your customers will do the same. They prefer a business approach that emphasizes volume. That's what works for them. 

Nintendo carefully curates its franchises so that they will maintain their value, and therefore Nintendo continues to make money off of them. That's the way they've always done it since the NES. A Zelda game to me is an event, a treasure to be kept. It also means that Nintendo is generally more willing to keep investing in franchises that would be considered failures at EA or Activision.

Speaking for myself, as a game collector I find Switch cartridges to be more enjoyable to collect than PlayStation or Xbox discs, and certainly more than digital files.

It's a combination of things...

1. Nintendo generally doesn't release sequels for most of its franchises. Particularly the kind of titles where one is likely to make the previous entry irrelevant.

Smash is an example of this. Ultimate makes Smash 4 basically entirely redundant, and would make it a tough sell at full price. So, they're not releasing a sequel. Same with Mario Kart, or Animal Crossing. There are exceptions, such as BOTW2 or Galaxy 2 for Wii, but these are generally experiences where one does not make the other obsolete. Pokemon is really the exception to this rule.

2. They make good games.

Not that other companies don't, but Nintendo makes really good games, and those are the ones that continue to sell at a higher price.

3. They have a big variety of IPS.

This ties into #1. Compared to a company like, Activision, Nintendo has a lot of wells to draw from. Lets say they released Mario Kart 9 right now. It would sell through the roof, but it would also cut at least 5 million off Mario Kart 8 DX's sales, and potentially force a price drop. So, even if they would sell 20-25 million copies, they're kind of only selling 15-20.

Instead, they could release something like a new 2D Mario title. That would cut some sales from NSMBU Switch (and Mario Maker 2 to a lesser extend), but that's not selling at the same level of Kart. By cycling through franchises, they keep older entries from becoming obsolete. Of course, there is a limit, as right now Nintendo is sort of running out of their heavy hitters to release on Switch.

By comparison, Activision's line up is a bit thinner. If they released COD once a year, that entry would probably sell for a while at full price, but they'd have nothing to fill the gap.

4. Nintendo's games are not as story driven.

That's not necessarily a good thing, but in this case I think it helps. With TLOU2 for example, you're not going to get the full experience unless you've played the first. So, Sony is going to really want to get everyone possible to play that one, so they can get on board with the second. Part of that is reducing the price of the first.

5. Nintendo has trained their market.

A lot of it is simply expectation. The same way Apple has gotten its customers used to upgrading, Nintendo has gotten its core base to accept its model. If other companies tried to do the same thing at this point, their fans may be more upset cause it's not what they're used to. But this is just kind of what Nintendo does and right or wrong, we've grown accustomed to it.

Personally, I was willing to buy something like Xenoblade Chronicles DE at launch, even though it's something I wasn't really dying to play, because it probably wasn't going down by more than 20 bucks within a year. On the contrary. I wanted Devil May Cry 5 about as much, but I knew if I waited a while I could get it for 20 bucks, and so that's what I did.

Keep in mind that PS4 software figure accounts for download only titles also. Nintendo doesn't include that.

Has "Because Ninty is greedy" been said yet?