I haven't seen any sales/revenue data supporting the notion they eventually make money. We DO know the 3rd Party Garbage Lightning doesn't strike twice (sequels to original Garbage titles ended up dead in the water).
Do they, the 3rd parties, all make money? Or is there a "Shovelware King" that captures most of the shovelware revenue while the rest just bleed? Is Nintendo the "Shovelware King" and all the 3rd parties just bleed, period? With the Sports/Fit/Kart brands doing so strongly, I only see an increasing gap where even the shovelware isn't bringing in the cash if a certain majority threshhold of customers automatically flock to Nintendo's publicized, reliable, predictable-quality products. If the shovelware isn't bringing in the revenuez, what's a 3rd parties remaining option? Continue the path of higher-budget games, sneak in some DLC, reduce the overall number of projects, reduce products that hit retail, reduce overall number of customers, reduce overall revenuez, then merge/die.