I know lots of people disagree and Nintendo is probably scared, but I think if they made the most powerful home console in today's age it would get third party support and it would sell great.
If they did that, it would have to be in alignment with the other 2 to be viable for the result you would anticipate, not mid-gen. But even still, I don't think that's what their aim should be.
While I don't disagree that western 3rd-parties are a boon, they are, as others have pointed out, so laser-focused on a singular demographic that Nintendo doesn't overtly bend over for.
No, the real target should be square on Japanese 3rd-parties, and let's be quite honest, Sony and Microsoft have been fit to let them die on the vine. Under-equipped to compete, thrashing about trying to find a place on consoles that wholly rejected the style of content that made the PS2 the must-have console of that generation.
Japan's developers are looking for a home. Wii couldn't provide them with that without forfeiting the demographic on other consoles. But after a bunch of years trying to chase that demographic and legit getting nowhere doing it, they might just be ready to give up.
And say what you want about Nintendo's current core audience, but they eat up Japanese games. As does a wide swath of gamers who feel abandoned by the current state of the industry. That is a poorly tapped market.
Switch offers a platform that isn't so grossly far off from the rest of the pack that it becomes a lot more palatable overall.
Nintendo should (And I think they do), make their future on themselves instead of depending on third parties. A Nintendo console should be designed as something that is done for people that want to have Nintendo and Nintendo-like experiences on the system.
They can be successful in that paradigm, and like the Wii showed, make great business as that.
They can't be successful that way long-term though. Wii U and 3DS to a lesser extent prove that.
They both got banned cause of this.
http://www.neogaf.com/forum/showthread.php?t=1302083
Spieler is one of the worst posters on this site surprised he wasn't banned sooner.
His whole schtick went under the radar largely because there was a lot to criticize Nintendo for openly. But being abrasive doesn't work to your benefit when the valid criticisms begin to fade away and you start thrashing about any way you can to stay "relevant".
Now that I think about it, Nintendo DOES have another western branch under their umbrella....
Nintendo Software Technology.
Oh, those poor souls. Looking at their repertoire, they were responsible for more ambitious projects like Metroid Prime Hunters, Wave Race Blue Storm and 1080° Avalanche. They were even gonna release a new IP called "Project H.A.M.M.E.R". Unfortunately, since then, Nintendo seemingly transformed them into a Mario vs. Donkey Kong factory. What a shame.
Project HAMMER had promise that they did not seem equipped to fulfill.
Nintendo doesn't need to buy or open up western studios, they quite simply can just contract them to make first-party games.
When you contract out, you can never be guaranteed the highest bidder. They've been slowly building to an acquisition, but the Wii U era was certainly not the time to perform such tasks. Next Level is more than likely going to be a Nintendo studio by the end of the generation, and it's because they've built the stable relationship they want with them, something they never achieved with Retro.