The problem is that Nintendo tried the core gamer approach for years, and it worked until the 64. Then the GC came out, and was everything a developer should have wanted; 7 buttons, lots of power, internet capable, and the best copyright protection available to the disc format. And how were they were rewarded for that? Being called kiddy and pretty much abandoned by 3rd parties.
I personally consider the N64 and Gamecube to be weak, self-sabotaged efforts that deserved to fail. The N64 was limited by the STUPID decision to use cartridges. Aside from that it might have otherwise been a full effort. At the time I figured Nintendo knew what they were doing but shot themselves in the foot with one really huge mistake. The Gamecube felt very much like a half-assed effort. Nintendo went in with a couple image problems going against it: they were kiddy, had **** third party support, made the same sequels over and over again, were behind the times with technlogy, and there was always long waits between games. Nintendo then proceeded to just pump out the same "kiddy" franchises they always did (including turning Zelda into a cartoon). They made no real effort to improve third party support. At the Cube's first E3 press conference the only third party game they showed off was Rogue Leader. One game? Yeah, that's going to fix the image of poor third party support. And that whole "waiting months between games" thing? Nintendo made sure to reaffirm that stereotype by having a nice huge six month drought of games after launch. The console itself looked like a toy, not helping at all with the kiddy image. They responded to accusations of milking franchises by milking franchises and having a whole campaign called "who are you?" that emphized how they're all about milking franchises. And Nintendo made sure to come across as backwards luddites by not going online when EVERYONE ELSE was doing it. Oh, and they lied about vague online plans for the first few years as well before revealing they weren't doing it at all. The Cube, for all intents and purposes, did not support online games.
At the very least the Cube was just there. Nintendo needs to win everyone back after the N64 but they didn't do anything special to get the old audience back just offered tons of reasons and excuses to be ignored. Aside from the cartridges thing none of the complaints about the N64 era were addressed. It was very much a "we're Nintendo so they'll buy it anyway" attitude and it failed and it deserved to fail.
I can imagine Nintendo saying "screw you" to third parties and core gamers after the Cube but I see that like someone who never practices, trains or excerises who sucks at basketball, blames everyone but themselves, and decides to start their own sport where they'll be the best at everything. Nintendo would have to admit mistakes, improve and work hard to get the videogame audience back but if they targetted a new audience that would cut them way more slack they wouldn't have to do any of that improvement stuff! Yeah!!
Despite all of our complaining and doubt, the Wii still sells strongly, so what reason does Nintendo have to change strategy?
That's my concern. They probably don't have to change strategy to make a profit. But since I'm not a Nintendo stockholder I don't give a ****. I want them to make a console that suits me and they probably won't. I guess it has been getting to the point where I don't care that much anymore, but they were for a very long time my favourite developer.
Though I think catering to casuals to the point of becoming irrelevant to core gamers is a foolish longterm strategy. The mainstream is fickle and changes tastes easily. If the casual market loses interest in games, Nintendo will need the support of core gamers as they are the only market one can count on to have a continued interest in videogames. Strictly targetting casuals would be putting all their eggs in one basket.
And ultimately Nintendo's problem is that they're just not very user-friendly. They're not friendly to third parties, they're not friendly to the videogame media, and they always enforce all sorts of restrictions on their customers and are notorious for telling their customers what they want. How can a company expect to succeed in the longterm with that kind of attitude?