Mix of a lot of things.
First the market that they sold the Wii to isn't the market that you can continually exploit with new products. The Wii was sold to them based on a gimmick and its really low price point. They aren't gamers who demand new games to be made constantly. This is a market that is content with Wii Sports and maybe a handful of other games. They don't have the demand for more games or hardware. They bought for the gimmick and for some cheap entertainment.
So this cuts out the bulk of the Wii's sales. Nintendo still has a gamer following but it's significantly smaller than this new casual market they sold the Wii to. With the Wii Nintendo alienated a lot of their fans. The company's focus was clearly on a new market not interested in core games and in their pursuit of this new market they didn't give the core gamers enough support. Sure throughout its life there were plenty of core games made by Nintendo's first party devs, but there weren't many compared to the competition.
There is also the whole deal with Nintendo constantly butting heads with third party developers. They just can't seem to agree on things. Nintendo's tech is always years behind and they were very slow to pick up online features. Even the Wii U's online offerings are pretty thin compared to PSN and XBL.
These two things combined really hurt Nintendo's appeal to the core gamer audience. With the Wii this wasn't a problem because the core gamers weren't their target, but since the Wii market are not traditional gamers that consistent demand for gaming products (as I said before), they had to turn back to this audience they just spent an entire generation alienating.
Furthemore they entered this generation with yet another gimmick filled device that was 5+ years behind the times in terms of tech. This once again makes it difficult for 3rd party devs to support the platform thus lowering the total amount of games that are going to be on the platform.
To make it worse the 1st party offering has been thin. Mario is the only series we've seen so far. Mario Kart 8 is coming and it looks great, but it's still a ways away and it's going to be nearly 2 years after the launch of the console.
Finally there is the price. For the actual competent package you've got to pay $350. That's a lot of money for a system with all of these problems I've mentioned.
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