We're talking business so it's all about money. If the third parties felt they could make money on Nintendo consoles they would go for it. Obviously they don't feel that they can.
I agree though that's only half the story. These are the same companies who stumbled through the HD era with inflated budgets and underperforming software. They left a lot of money on the table practically disregarding Wii. If they were really so business savvy, this thread wouldn't exist.
I think Activision, EA, Ubisoft, Rockstar, and perhaps even Capcom would disagree with you on "underperforming software", despite individual titles that have performed poorly. Much has been made of the companies who failed to survive this last generation, but I honestly don't see what the big tragedy was. The companies who have either gone under or transitioned to new business models were weak: they couldn't make software that people would actually buy, so they failed. That's how this market is
supposed to work. The weak die out, and their death leaves the room for new companies and the expansion of the remaining developers.
In fact, I'd actually argue that we wouldn't have seen this explosive growth in digital download software if so many companies
hadn't failed with the traditional model. In my opinion, the industry is stronger now with a more diversified distribution structure and more specialization.
Sure, you have the race to top Call of Duty, but is that any different than when platformers were all the rage and everyone was racing to top Mario? Or when RPGs were all the rage and everyone was racing to top Final Fantasy 7? If you think there's homogenization
now, check out all the me-too JRPGs that sprang up in the wake of FF7, not to mention all the mediocre mascot platformers of the NES and SNES years.
Failure and loss isn't always a bad thing. This last generation in general reminds me of one of Walt Disney's most famous quotes (and people forget just how often Walt Disney
failed and
failed BIG):
“It is good to have a failure while you’re young because it teaches you so much. For one thing it makes you aware that such a thing can happen to anybody, and once you’ve lived through the worst, you’re never quite as vulnerable afterward. To some people, I am kind of a Merlin who takes lots of crazy chances, but rarely makes mistakes. I’ve made some bad ones, but fortunately, the successes have come along fast enough to cover up the mistakes. When you go to bat as many times as I do, you’re bound to get a good average. That’s why I keep my projects diversified.”