Nintendo just shot themselves in the foot.
I don't know how much the rest of you know about handheld gaming (I'm an expert), but honor and shame are huge parts of it. It's not like it is in smart phones where you can become successful by being an asshole. If you screw someone over in handheld gaming, you bring shame to yourself, and the only way to get rid of that shame is repentance.
What this means is the Nintendo public, after hearing about this, is not going to want to purchase Xenoblade for either system, nor will they purchase any of Nintendo's games. This is HUGE. You can laugh all you want, but Nintendo has alienated an entire market with this move.
Nintendo, publicly apologize and cancel Xenoblade for 3ds or you can kiss your business goodbye.