Romhacks and TAS videos are done on not legal copies of games.
Putting aside the question of whether or not that claim is accurate as others have covered it pretty effectively, it's also just not relevant. Anything like a TAS video of a game is going to technically qualify as an unauthorized derivative work (giving Nintendo the ability to make claims against it) unless it can be held to fall under Fair Use. Whether the creator of the video played the game in a way that violated the original license is actually not a factor in the video's legal standing in either case.
I think looking at the Fair Use standards is actually instructive here for why this is such a poor choice on Nintendo's part. The factors that go into a decision:
- the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
- the nature of the copyrighted work;
- the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
- the effect of the use upon the potential market for or value of the copyrighted work.
A TAS video is almost always produced for a nonprofit (and, at least at a stretch, "educational") purpose; it will generally skip a great deal of the game's audiovisual content, and not in any way reproduce its gameplay; and its effect on the potential market for a game will, if anything, be positive, as TAS videos often increase customer interest in more obscure games, or remind people of how much they enjoyed more prominent ones. This might well still not be enough to prove fair use, but it positions these videos far, far into the corner of harmless and unthreatening use of content.
Basically it comes down to this:
Dumb move. Generating bad press for no good reason at all.
There's no actual concrete benefit whatsoever to a move like this -- it doesn't sell more games and it doesn't bolster Nintendo's case in any way against future infringements, but it
does anger an influential part of their fanbase and crack the door to the possibility of an unfavorable court ruling that restricts their options in the future. The only real reason you see a company take actions like this is that they either have management out of touch enough to fundamentally misunderstand the market they're dealing with,
or a staff of lawyers sitting around inventing work for themselves in order to make sure they look useful.
Bad press with who? The miniscule audience that watches TAS videos?
In PR the size of an audience isn't actually all that relevant -- what really matters is how
influential an audience is. We're in the era where creators of video content are some of the biggest and most influential tastemakers in gaming, and where events like AGDQ draw enormous audiences and tons of coverage every year. The risk of something like this is that you don't just piss off the two or three guys making Mario TAS videos, but that a group of online personalities use it as a reason to alter their coverage of Nintendo.
On its own, sure, this is probably not likely to have a huge downside. But it has absolutely no upside, and Nintendo isn't in the 2008 position anymore -- they're losing money and having trouble getting traction with both fans and the media for their current offerings. Every thing they do now that feeds a narrative of Nintendo being hostile and out-of-touch makes it that much harder to turn that slide around.