They also went on a hiring binge and got talent that was being laid off by other companies, and setup partnerships and joint-development opportunities with companies like Platinum and Mistwalker and Namco Bandai and Tecmo Koei - completely changing the way the majority of the game development community in Japan saw them. This took incredible time and effort frankly. Other than that, Nintendo has expanded Monolithsoft, Retro, and fostered relationships with a dozen smaller studios in Kyoto that are offshoots of employees from Konami, Square, etc.
At the same time, they completely killed off their Western studios as they wanted to focus on casual games. At Headstrong Games, they cancelled Knight Wars. The studio worked on some games for 3rd parties and, since then, has seen many layoffs. Now it's pretty much on life support due to Art Academy.
With n-Space they worked on Sphear for Wii, also a hardcore title. It was one of the titles missing in Nintendo's casual lineup, but they decided to abandon the studio.
How about NST? 3DS-only after the cancellation of Project Hammer and various Wii ideas. The studio is pretty much a new one as most left during 2007/2008.
Fuse Games/Silverball Studios had a nice pinball game based on a well-known Nintendo franchise in development for Wii. Dead, just like the studios.
Nintendo's partnership strategy as well as their internal HR strategy in the West is extremely short-sighted, as evidenced by the current and upcoming lack of titles.
They've also had to build out an entire OS team and built a social network through a partnership which they are managing internally. Nintendo also had to hire, over the past few years, tons of people in network engineering to bulk up on their core software abilities - unlike Microsoft which had people ready to go on that front. They are still lacking on this front but it's come a very long way and will improve - Sony is evidence of that. Even the Xbox has changed dramatically over the years.
As you say, it's debatable how successful they were in building their OS team, especially as the Wii U OS still leaves many points for improvement. Based on the Wii, I'm not too confident that they will add a lot of features. Yet you are right about the development of Miiverse, which certainly is a neat addition for the hardcore Nintendo fan.
More importantly: scaling up creative staff from say 1000 people to 3000 or more, for a company with such a unique workshop-like culture as Nintendo is really hard. Nintendo has the toughest hiring standards in the industry and have a very strong internal culture, and they are very careful about not ruining that - unlike Silicon Valley ponzi schemes that are trying to get bought in a few years and will hire anyone with a Stanford degree just to appease venture capitalists. Nintendo has had to exert tremendous effort to ensure they hire in a sustainable way where people work together and the culture thrives.
The problem simply is that they started way too late and avoided potential opportunities where they could have expanded easily. With all the recent delays, Iwata says that they did not expect HD development take this long and such a long workforce. This is simply bad planning, nothing else. And this is also one of the few areas for which people thing that Iwata lives within his own world - the same holds true for the current profit forecasts.
So then, what should Nintendo have done in the West? Throw millions into California-based companies for no reason? Buy up studios only for the talent to leave? Money hat a bunch of games from developers that had no interest in making Wii games? I keep hearing all this talk about "Nintendo and West" - but there aren't a lot of compelling things Nintendo could have done. Building studios takes years, and Nintendo isn't just going to throw millions for another nightmare like Retro to occur which consumed incredible time from NCL and EAD.
Strategic partnerships and buying up studios can work, if Nintendo provides some freedom to the studios. Quite obviously, that's not really the way working together with Nintendo works. That's also why the turnover rate at Retro and NST has been continously high.
As for your tirade about Iwata neutering NoA. NoA has been dead for years. That's the truth. Treehouse is the last good thing about it and that's because Nintendo's core localization team has been together FOREVER and all their kids go to school together - they are incredibly tight and will never leave unless something drastic happens. The rest of NoA? The Wii was such a novel product that many people coasted through, even though they had the ability to really get deep and do some impressive things with their fan community. That's a failure of Reggie and other execs, not Iwata who basically gave them the freedom to do what they wanted and even made a bunch of games like Xenoblade available for them to localize.
Without knowing exactly the way of product approval works at Nintendo, I'd not jump to conclusions. At least for the European markets, such decisions are made in Japan.
Part of the problem is that NoA never got great leadership after two rounds of poaching by Microsoft (once before the Xbox launched, another time right before the Kinect launched and Microsoft started doubling or tripling salaries to bring in Nintendo's marketing people), so this has been troublesome as Iwata does not have a trusted counterpart at NoA with a blood commitment to the company that Yamauchi did in the form of Minoru Arakawa. I honestly think this is why Iwata named himself CEO of NoA was because he wanted to play a more direct role in building executive capacity and ensuring that NoA was in position to succeed. He really needs to move to the US because NoA is playing games of musical chairs. The biggest idea Reggie has proposed has been TVii, and NCL let them do that - Reggie could have proposed any number of things frankly - but this is the best that came to his mind.
I'm sure there have been a lot more ideas proposed by NoA. But it's well known that NCL keeps most of its development in Japan. I think this is well illustrated by lack of features that have been standard on other platforms (e.g. the account system).
The other thing I'd like to remind people, is that America isn't the only market important to NCL. Europe is frankly, just as big and just as important to Nintendo, if not more important given some of the shared gaming tastes in Europe. Nintendo spent TONS of money on marketing in Europe going from a has-been to holding the console crown when the Wii came out. NoE does a ton of work behind the scenes that people are not aware of to get Nintendo from constant third place finishes to where they ended up in the Wii days. Do you guys think this just happened magically? We don't hear a lot about how engaged NCL got into Europe - but there are a lot of NCL people that flew back and forth between Japan and Europe during the Wii days to give it the kind of coverage it now has - and this consumed Iwata's time.
This was a success of the great marketing team of NoE, they created the incredibly well done campaigns for DS and Wii. I'm not sure how you can attribute that to NCL as marketing really is one of the few things where the local teams have full control. Anyway, with Wii U and 3DS they more or less failed.
This is all my opinion frankly, and I say this more to try and counter this ridiculous and IMHO ethnocentric inertia of "Iwata is a fool, doesn't get the West, and is keeping NoA weak cause Japanese companies are pride LOL lol lol!!111" - but I hope what I say will resonate with some of you - running Nintendo isn't a joke - Iwata is a great executive who is finally growing into his role. Yamauchi made LOTS of mistakes early on and Nintendo lost a ton of money with his ill-advised ventures. But that's the beauty of Nintendo - they really want to grow their executives and give them leeway to make mistakes - Iwata will learn - and when he figures out NoA - I am sure Nintendo will have an amazing core team in both Japan and America.
tl;dr --- There really isn't anyone better than Iwata who has the respect within Nintendo's creative teams, support from shareholders, and an overall desire to see it move forward, that could come in and do the things that an extremely off-beat culture like Nintendo is now doing for the future.
Iwata is finally growing into his role? After 10 years? I'm not sure whether you are serious about it as his decisions and current strategy come off as extremely short-sighted. Instead of building new franchises, he is putting his full focus on Mario and does not even innovate the established franchises as he's done before. Unlike Wii and DS, the 3DS and Wii U do not resonate as well with the markets nor do they create a huge hype. If anything is happen at the moment, it's more like Iwata and NCL did not do a proper market assessment before launching 3DS and Wii U.
2. Agreed that something is better than nothing. I suppose NoA had a lot of mud on its face after Silicon Knights didn't work out, and in particular, the Geist experiment was a failure (but then again, the GC was effectively dead). I'm not privy to the conversations Reggie has with the rest of his team, but here is my assessment: if Reggie came up with a plan to build up NST and put a task force together to execute it along with a plan to target a series of games for exclusivity, my sense is that NCL would listen. The thing is, I just don't think Reggie could really do it. I'm sorry to say it in such a blunt way. Howard Lincoln wanted Tetris and sent people around the world to get it. What would Reggie do if he really believed in a game or wanted an Indie to make an exclusive game with a bigger budget? One explanation is that even NoA was unprepared for the hit the Wii was going to be - and as a result they were occupied with building their organization for core positions. Based on some people I know who worked at NoA - there was even a belief early on that because the Wii was such a smash hit - games like GTA would end up on the Wii - because the userbase would be too big to ignore. Unfortunately that never panned out and by the time they woke up - the development community had moved on.
The Geist experiment was not seen as a failure internally. They worked on a product for Wii afterwards, which was canned when they wanted to focus on titles such as Wii Party, Wii Sports, Wii Fit, and Wii Crush.
It was effectively NCL which killed NST when they put them on apps for DSiWare and casual Wii titles, so no, NoA has little to say when it comes to real development. I mean, even the supervisors are from NCL.
And you are right, people believed 3rd parties would jump on board if the Wii was to be come a success. Unfortunately, the Wii audience was completely different from the audience that bought games such as GTA - those people were on PS3/360 as they wanted great graphics, online gaming, and so on. If Nintendo did not think the same, we would have got Project Hammer, Sphear, or Knight Wars.