Third party support for the Nintendo console revolves around who is the installed base and not the hardware

There is an Iwata quote on this from an investor briefing saying exactly this. I wish I could find it now. But it is there.

Here’s the myth: third parties scream in horror about Nintendo consoles because they are ‘underpowered’.

Already, the myth doesn’t make sense as Nintendo consoles, prior to the Wii, were always superior in hardware capability than the competition. Nintendo handhelds, even when confronted with superior hardware competitors, also always had a robust third party support. If hardware was such a concern, everyone should be making PC games as that is where the superior hardware is at.

While certain hardware issues aren’t trivial such as the online elements, the composition of the install base is more important than the install base number. The Wii had a very large install base. Third parties looked at this and told Nintendo’s licensing department: “The numbers are attractive, but these people do not wish to buy a game I wish to make.” It is why you saw all the third party support for Wii revolve around party games and family games.

Nintendo’s mission this time around appears to be to create an install base based on gamers that would like to purchase these third party games. Clearly, this install base number will be smaller than the Wii. At this point, I don’t think Nintendo cares as they know they can get those players at some further point.

There is immense marketing coming from the console makers (especially Microsoft) about comparing the Wii U to imaginary consoles and now imaginary games. What will be next is imaginary install bases. This marketing is being laser most intensely at the game developers.

Remember hearing how the Gamecube was just a bunch of ‘kiddie gamers’? The Gamecube was a superior machine in every way to the PlayStation 2. But by creating the marketing that the Gamecube install base is nothing but kiddie gamers, this was to persaude third parties to not put out games for it since kids won’t buy their games. When various third party companies decided to put out games for the Gamecube anyway, Microsoft was aggressive in paying them money not to.

Nintendo’s approach with the Wii U is to create an install base of the gamers the third parties like so they will make games for the system. This is a change from a generation ago when Nintendo was focused on the ‘size’ of the install base. Now it is ‘size’ and ‘composition’.