I see the trail going upstream to be a bit different. Basically M&S is on the same course as Mario Kart. All owners start off with Wii Sports. That is the universal downstream title. Now they can move upstream in two ways. 1. The peripheral based easy to pick up driving of Mario Kart or 2. A familiar Wii Sports-esque gaming experience with M&S. This game can actually lead someone into both franchises simultaneously because it still has the Olympic games hook and two familiar icons to play them with.

@Onyxmeth: I thought i looked at it from both directions.
M&S can be the title after Wii Sports and just aswell what you may want to try after Mario Kart. Actually, my original thought was thought only halfway through, since it's quite likely that the new audience jumps to minigame collection before MKWii (and i have sometimes been pointing this out), since the minigames have similar gameplay to Wii Sports.
Nintendos strategy is to get the new audience into gaming with real-life sports games, then introduce them into videogame franchises with low entry point games (Mario Party, Wario Smooth moves etc.). After people get familiar with the franchises, Nintendo wants to get them into games like Mario Kart or Wario Land, which both are easy to pick up, but offer very different gameplay from the minigame collections (hey actually offer very core type of gameplay).
Sega is clearly missing the game that would take the new auudience into core Sonic games, like MKWii does with Mario. But, i believe we will see the type of gamf from Sega.

Yes, Nintendo and Sega working together is great.

Wii needs good racing games too. What about Sega rally? That would be great on Wii and i think it would fit the Wii demographic quite well. So come on, Sega! I think it would sell well for you!

@Onyxmeth: M&S isn't the bridge title needed. It still is "short bursts of fun", just like Wii Sports, and due to this, it doesn't open up the way to the core titles, where you need to play a little bit longer at a time. Sonic Riders could have been a good title for upstreaming, but it has the same flaw as Donkey Kong Jet Barrel Blast; it's too "weird" for people to be able to associate with it. Racing/driving games have pretty much universal appeal, because everyone knows what driving is. What Sega would need, is a racing game comparable to Mario Kart. Considering Sonics image, somekind of motorbike game maybe, or maybe an offroad racer with Sonic in it with nothing too serious. We all know how good racing games Sega can make when they want to.

When Wii Sports as an introductionary title represents real-life activity (or any "Wii" title for that matter) with real-life rules, the minigame collections are introductionary titles for actual videogame worlds where real-life rules don't need to apply (and they rarely do), since they just would limit the "fun" that can be made in games with the cost of realism. Next phase in upstreaming would be the "actual" bridge titles, where you get the people to sit around the game for longer periods at a time completing the "mission". So basically: Wii Sports -> M&S -> MKWii -> SMG -> Zelda. Everyone don't naturally go all the way to the end, but that way you could gain endless legs and huge game sales and it's likely one of the reasons why Nintendo doesn't have "Players Choice" games on Wii (yet).
Now, my point was, that Sega is still missing the title (atleast one that delivers) that would get the M&S gamers to Sonic and the Secret Rings or Sonic Unleashed. After Sega getting the gamers upstreamed, they are familiar with the name "Sega" and are interested in trying out other Sega titles.

What about Sega Superstars Tennis?   I think that was the intent.  To bridge new gamers to Sega games (notably Nights, Samba and of course Sonic).   Great concept, too bad it was just so.... boring.

@Gamerace: Apparently the game didn't deliver and judging by the name, it seems more like fan service.
If we look at it from the viewpoint of upstreaming the customers, Sega Superstar Tennis is on the wrong step of the ladder. If we have accessible tennis game, it's in the same line with the minigame collections - right after Wii Sports. It also promotes franchises, from which some are dead and some are core titles, which you need the bridge to.

Since Sega Superstar Tennis wasn't a huge success to begin with (atleast not on Wii, despite its strong sales), the games effect is very small. When the game starts closing in 5M, that's the game you need to use as a stepboard to go further. For example, if Wii Sports hadn't been so successful, it would have caused Nintendo to rethink their strategy. Maybe Mario Kart Wii, Wii Fit and Wii Music had been branded to something else or the games would have had a change in their design. And if Sega Superstar tennis would've been a huge success, Sega should've pushed "Sega" branded games. If they want the core titles to succeed, they need to introduce new characters on a game that either is a core title or a bridge title.

I can see Sega slowly moving closer to Nintendo, and almost becoming a 2nd-party developer.

Ninty likes Sega - they come from the same old school background, and in theory - target the same 'all consumers' market.

Sega does a good job on game production as well - they just need Ninty's guiding hand when it comes to game design.

What about a Mario & Sonic RPG? That would get my vote!