I already made a blog stating my thoughts in the matter in more brief terms years ago, but it was getting to a point where I need to write a bigger blog on this. I admit, Nintendo wasn't doing so hot with the 3DS (though in Japan at least, it did pick up massively) and right now, they aren't doing any better (like they said they would) with the Wii U, but I still have my hopes that Nintendo will pick things up for that console. Will Wii U be as successful as the Wii? Probably not, but it is possible to still be popular and not sell as well as it's predecessor (see: Game Boy Advance compared to Game Boy).
That being said, even if Nintendo picks things up like they do, it still doesn't stop the continual demands (even from industry insiders both former and current, more recently coming from Eidos life president, Ian Livingstone) for them to be like their former competitors, SEGA (more noted) and Atari (less noted), and be a third party developer/publisher either because their consoles like N64, GameCube and Wii U aren't selling like they should or the hardware just doesn't appeal to them and only play it because of exclusives.
Sure you could defend that you would be spending less money on more hardware, but that seems to be the only real benefit... if they don't fade away in many other aspects much like SEGA and Atari.
Let's look at what happened to other two...
SEGA had wide success with the Genesis/Megadrive, but reception with their hardware was starting to fade with the CD/32X add-ons and degraded even further with horrible Saturn sales (though to be fair, N64 was struggling too, but that ended up being more popular) and with it, the company was struggling financially. As short lived as the Dreamcast was, it still proved that SEGA had positive reception among gamers, but all that went downhill when they had no choice but to drop the Dreamcast due to a mix of more financial struggles, major hardware flukes like really easy piracy, and the hype for the PS2.
I remember reading an issue of Nintendo Power in Elementary School that Sonic was making a Nintendo appearance on the Game Boy Advance and I remember being very excited myself, but me being a kid back then, little did I know of the dark times that would come for that poor blue hedgehog.
Sonic the Hedgeog 2006 not only confusingly uses the name of the SEGA Genesis/MegaDrive cIassic (which seems to be a trend with these reboots, see the later released Mortal Kombat and Tomb Raider), but uses it insultingly due to a horrible storyline (with a major note being Sonic and a human female named Elise's relationship) and overall being more broken than the previously panned Shadow the Hedgehog (On Shadow's game, yours truly likes this one but more of a guilty pleasure these days, but that doesn't mean I can't note the mass hate around it).
Even a port of the cIassic game damaged them even further...
Much like the GBA port of Ultimate Mortal Kombat 3 (titled Mortal Kombat Advance), Sonic the Hedgehog Genesis broke what made the original great by having massive slowdown and game breaking bugs, most of which randomly kill you when they shouldn't.
Even many of their other IP's faced some sort of struggle, we haven't seen a new Jet Set Radio, Panzer Dragoon or Shenmue since the XBOX, the last Nights game on the Wii was a bomb and the only return we ever saw of the characters from those games were in a crossover kart racing series with Sonic which so far, only spans two games (Sonic and SEGA All-Stars Racing and Transformed). Add one more franchise before I move on, despite it being more recent... Bayonetta. Just this announcement alone sparked controversy (which put it not only on SEGA's shoulders, but Platinum Games and Nintendo share it as well) and is more then likely a sign of what's to come for that game (and Nintendo's already facing an uphill battle into the M rated market after bad sales of Eternal Darkness and Geist, both for the GameCube).
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On to Atari, who had it even worse with their consoles especially after the video game crash of the 1980's. Their then newer systems (7800 and Jaguar) failed and the last time we ever saw the likes of Pong or Breakout were on the PlayStation. By then, they became mostly known (in North America at least) for localizing many games from a popular anime/manga franchise created by Akira Toriyama (being a fan of this franchise myself, I do own a few games, although they aren't mentioned). But it all ended for them when Namco Bandai (though I believe the Bandai half has been licensed off of franchises for games and toys for years) took over NA distribution rights.
Atari did publish other games like Indigo Prophecy/Fahrenheit, but how many people even remember NYPD Det. Carla's case in the diner murder compared to having many interactive versions of Goku fighting his rival Vegeta or the epic moment when he transforms into a Super Saiyan and takes his revenge on Frieza?
While there are gems to be had in there (not only do DBZ fans love it, but many people in the fighting game community did too)...
...there was still too much shovelware
To conclude, how would Nintendo's own stuff even fare up to systems with audiences with very different appeals? Would Pokemon be holding it's own against Final Fantasy, Tales, and many other JRPG's? Would Smash Bros still be noted on the same consoles that have more Mortal Kombat, Street Fighter, Tekken and Guilty Gear games? Would Mario be that memorable of a platforming series compared to Little Big? I have my doubts.
Well, there's my thoughts on the matter and probably my longest post to date. Comment below and tell me your thoughts?