One of the main problems that Nintendo has is the fact that many of their console's features aren't as rich as the competition. PS4 and Xbox 1 have better online gameplay, with many more games available for download. Both systems offer the powerful graphics as well. With Sony and MS, you have both motion controls and traditional controls. The game libraries may not be as rich yet, but by 2015, both systems will have many games. Also, the third parties are much better on PS4 and XONE. PS4 has Virtual Reality in the future, and Xbox has excellent integration with the TV. Wii U is harder to recommend compared to the competition. If Wii U was 150-200 dollars, it would be easier to get, but its too pricey when compared to the competition. Its sort of in the same position as Dreamcast. The competition again seems much more advanced, so most gamers are going to just wait for the Sony and MS systems again.
Nintendo also I think may have caused more problems with Wii than solved. One, a lot of people bought Wiis, then switched to 360 or PS3 when they got bored of the nintendo games. I think a lot of people are soured on the wii name because of it. The Wii's 3rd party library is filled with a ton of bad games, which also hurts the name. By the end of the life of the Wii, it had not kept up, feature wise, compared to the competition. All of this I think hurt the brand in the end, despite early success.
I think that nintendo can correct the problem quite easily. They have to just shake some of their pride off.
1) Make tons of your back catalog available. There's really no excuses here. Any game that nintendo holds the license for should be avaliable. If Sony and MS can get PS2 and Xbox games online, then gamecube games should be available. I understand some games may not be possible due to licenses, but any Nintendo published game should be avaliable
2) Decrease the cost of hardware. They can't expect to sell their console for 250 dollars when a PS4 is 400. That's two games and a remote difference. People will see the wii u as overpriced.
3) Purchase "off the shelf" x86 processor. Using an x86 processor will help the programmers put out content quicker, will shorten development of the next system and will decrease prices.
4) Get the online system right. People expect the online system of Nintendo to be on par with PS4 and xbox. They need to spruce it up.
5) Consider VR again. Since VR may be the next big thing in games, they'll have to explore it sooner or later. It would be good to try and implement it as soon as possible. If they don't have expertise, perhaps license the technology.
6) Don't chase away 3rd parties. Its tough because they basically have given SONY and MS a huge market for free. If you want Activision, EA, 2K games, then you won't be buying a Wii U, or you'll be buying a Wii U and another game system. They lose on the hardware numbers front and on software licensing front. I know part of it is the market they have made, but including third parties will help them.
I'm sure the board is considering all of these options and decided against them for good reasons, but they seem like, simple obvious ways to improve their fortunes.