"More room for third parties to survive" was always the apology for a thin first-party catalogue at launch, though, even before mid-priced digital-only games were a factor. It certainly didn't work out for the 3DS, though we'll see if anything is different this time around with Zelda holding the fort as a solitary first-party titan while indies cover all the bases for diversity.
What I'm more optimistic about it this: if I recall, developers like Yacht Club and Image & Form that targeted Nintendo as the lead platform, with games in Nintendo-friendly genres, frequently reported in the Wii U/3DS era that even once they went multiplatform, Nintendo accounted for a substantial proportion of their sales. Word gets around about that, and word will get around again if the first wave of Switch indie titles and timed exclusives pay off handsomely. For indie developers in certain genres, the Switch-buying market is their blue ocean: a market with favourable demographics that isn't so saturated with indistinguishable competition that they have trouble standing out, and which (unlike Steam) doesn't have a norm of waiting for bundles or a $5 price point, or a player base notorious for a crippling backlog problem.
I could see an embrace of the Switch paying off in spades. Developers returning from the 3DS and Wii U are back because they know the Switch will be friendly territory, and their peers in the indie sector are catching on.