While you are right that Nintendo shouldnt be caught off guard when it comes to the transition to their next system. I dont think focusing just on hardware sales is sufficient when talking about the health of the system. As long as the software is selling rather well and above expectations Nintendo doesnt need to panic - with YW2 and the upcoming Smash, MH4G and Pokemon they will make a lot of money on software.
Depending on what they can lineup for next year software wise and in in addition to their Amiibos the 3DS decline could be smaller than anticipated. I dont see the software market on the 3DS being killed as fast as the piracy did with regular DS.
It also depends on potential BC how Nintendo handles the final 3DS period - its pretty much a given that we will get another Pokemon mainline (X/Z 2 i guess), Pikachu Detective game ( Amiibo support is likely), Project Steam, Majoras Mask 3D ( if it doesnt hit this year), FF Explorer, new DQM, new Ace Attorney, Yokai Watch and Puzzle and Dragon follow ups are likely as well....so as long software still sells as well as it does, there is no need to shorten the 3DS life-span. If their next portable is a complete cut from the DS/3DS line, i expect the next 3DS revision to be sold for at least another two years.
Yes, this is a fair point, as long as software is selling well, publishers will often support a device even if the hardware isn't doing great.
A good example of this is also the late era of the PSP and PS3, which were on the decline but still got a lot of support. In the case of the PS3, it's still getting good support.
However, this is part of why I started following hardware more than software as a leading indicator. Neither the follow-up to the PSP or PS3 got great support, especially out the gate. Sony had to make a herculean effort with the Vita to get it to where it is now and that's still not an amazing place.
This also actually supports your proposition that the 3DS will be well supporting for years after the 4DS comes out, even if it's just by virtue of publishers wanting to sell to the 3DS installed base.
I feel the reason for failed transitions though is that a lot of publishers operate on a three year software slate, and generally like to play it safe. If you're sitting here and greenlighting a game coming out in 2015 or even 2016, if you're making a game that would traditionally be for a dedicated device, the odds that you will greenlight it for the 3DS are pretty good, since it should still have the best and most active audience by then.
If you're deciding on your games that are for 2017 however, you have to look at the current situation and make a decision what you're going to focus on. The 3DS is likely to be a tapering software market at this point. Do you make a game for 3DS anyway? Do you make a bet that the next Nintendo handheld will take off? Do you make a cross-gen game? Do you add the staff on to a console title that needs more staff? Do you combine two teams to meet the increased standards that the 4DS has? Do you consider breaking up the team and making three mobile titles? Do you have them work on an f2p online game for Asia?
At this point, you have to try and do a whole bunch of prognostication about a time that is quite far away. So, you look at the current market. You see that 3DS software sales are good, but that the hardware is quickly slipping. You see that the Vita is unlikely to get a successor. You see that the PS3 is on its last legs, and that the PS4 and Wii U really aren't looking so hot. Also, your competitors don't seem to have many (if any) games announced for either the PS4 or Wii U either. The PS4 is doing well in the West, but Japanese games largely aren't doing so hot there. Mobile is growing heavily, and the big publishers are all investing it both it and PC online browser games. However, neither of those markets support the business model that your traditional dedicated device game uses.
It's a pretty hard spot to be in. When consoles started going down, you could move to handhelds and still use a pretty similar business model. Sure, the content was a bit different, but it still pretty closely resembled what you were making before, and hey, it was cheaper and easier than making a PS2 game and definitely than making a PS3 game. For the 4DS, maybe that's not as true anymore, especially if your series has any ties to higher production values.
There's often a big reward for getting the decision you make right, and sometimes a harsh penalty for getting it wrong. This is why I think we saw a lot of series leave consoles and bet on handhelds and why we saw a lot of developers who made major PSP games either move to 3DS or folding the teams into major console titles that did well in the West. I think this is also why we saw a lot of mid-performing DS titles evaporate into the ether to bet on the up and coming mobile market.
Now, have we hit a plateau in that shift? Hard to say. What still comes out on dedicated devices is pretty centralized around a few key successes for each publisher at this point, along with some really low budget filler titles.
I guess my perspective is that I feel anything that even raises the question of "The 4DS might not be as big a success as the 3DS." is bad, especially at this point, because this is when a lot of publishers are deciding on their early plans for the next generation of handhelds. Now, if they want to make games for a dedicated handheld, obviously they have pretty much no other choice as time goes on, but I think it's in Nintendo's interest to make sure that "they want to make games for a dedicated handheld" is their starting point in this thought process.
