This thread, and I mean the rehashing of this topic again and again, is getting old. Little new discussion occurs by bringing it up yet another time. The lack of business sense behind the suggestion is the most irritating part. It amounts to magical, wishful thinking: "Go 3rd party. Make profits!"
Let's break it down again.
1. 3rd party means no licensing fees.
1a. Wii sold 850 million units of software, only 350 of which were Nintendo first party, which means over 500 million x licensing fees. This isn't even counting the licensing fees from the DS/3DS. This is money that Nintendo would not garner if they were not producing their own platforms.
2. 3rd party would mean they have to PAY licensing fees. Do you realize that licensing fees can be up to $10 per unit? Do the math on 350,000,000 x $10. Think about that.
3. Expanding the user pool does not linearly increase sales potential. Just look at RE4 or Okami, both games that were re-released on platforms with huge install bases. Neither game saw linear increases in sales due to these new, huge install bases. There is no guarantee Nintendo will suddenly sell 100 million copies of NSMB, Mario Kart, etc, compared to the 20-30 million they sell now.
3a. Look at the reception "cartoony" games have received on Sony/MS platforms. Games like Rayman, Tearaway, Puppeteer, Little Big Planet have either bombed or barely scraped by. There's no guarantee that a system where the biggest sellers are God of War, Call of Duty, and Madden will greet Mario with open arms and open wallets.
That means Nintendo could easily see that 350 million units sold dwindle to 100 million (minus licensing fees).
4. Nintendo hardware, like it or not, is geared toward Nintendo software engineering. The hardware facilitates the software development process and the software compliments the hardware. It is a symbiotic relationship. Nintendo goes out there with new ideas and sometimes it hits and sometimes it doesn't, but the two always go hand in hand, from the N64 controller with its analog stick to the Gamecube with its weird buttons and on to the Wii Remote and the GamePad and the DS with its two screens. Take that away and you lose some of what makes Nintendo what it is, you lose some of the creative drive that results in games like Rhythm Heaven and Wii Sports.
5. Nintendo drives positive hardware features, from the d-pad to the gameboy printer to the IR pointer. Again, not every feature hits it big, but so much of what they've done has been copied by other companies that it would be a loss to have their unique approach to design taken away from the industry.
It's hardware that drives profits. That's why Sony and Microsoft wanted in on the action. That's why Sony and Microsoft are not 3rd party. The money is in licensing fees and using a platform to drive first party sales. Hardware is stable, even when it isn't profitable the first (or second) year. It's a stable investment, as long as you have the money to carry you through the R&D and launch years.
Don't buy the Wii U if you think it's a terrible thing with terrible effects on the industry. That's what I'm doing with the Xbox One (will never buy, period). Vote with your dollars and your voices if you want Nintendo to change their underpowered approach to hardware design. But use your heads if you want to make a compelling business argument, because "go mobile, go 3rd party" is about the worst advice to give Nintendo. You're asking a large, profitable company to cut off its head because maybe there's gold inside, maybe, I dunno but possibly.
That's why Iwata has stated that Nintendo will not get out of the hardware business, and if they do they will shut down rather than go 3rd party, because it means the death of the business, a massive reduction of their workforce, as well as of their finances, which will necessarily mean a decrease in their capacity for experimentation and thus a consolidation of their core assets into exploitable formats and software publishing models, much like EA and Activision. And that really would be the death of the company.
