TLR: Nintendo is just too different from what the big third parties have become over the last 15 or so years. They seem to have a totally different vision for what they want console games to be compared to, say, EA.
The OP is basically an elaboration of all the old arguments we've been through before, and I also think it misappropriates some of the later points.
It's pretty much accepted that this all started when PlayStation provided developers with an escape from Nintendo's draconian policies of the 80's and 90's. Where things get hazy is Nintendo's relationship with third parties between the late 90's and today. For that timeframe I've actually given up trying to blame one side or the other, and I've begun to think that Nintendo and most of the major western third parties are just too different from one another. They seem to want different things.
Starting around the Gamecube era, Nintendo actively tried to reverse the third party policies it was known for in the 8 and 16-bit days. I remember reading articles during the Gamecube era where developers stated Nintendo still had high minimum orders compared to Sony or Microsoft, but Nintendo had clearly tossed the strong-arm tactics of the 80's. Over the course of the Gamecube era, Nintendo more or less repaired their relationships with Japanese third parties, almost all of whom are still fairly willing to support Nintendo consoles where the market makes sense.
I think the OP might misunderstand what actually caused the Gamecube's problems. I think the mini-DVD issue is a bit overblown, as there weren't a huge number of console games during that era that had to be cut down for Gamecube. In my opinion the real problem was that the Gamecube had no "selling point" to developers. The PS2 had its massive install base, the Xbox had Live and the familiarity of its PC-like architecture to western studios, but the Gamecube didn't really have anything to make it stand apart. Before the Gamecube launched Nintendo went on about how easy the system was to develop for compared to N64, but that wasn't enough. Nintendo didn't anticipate the Xbox being equally accessible to developers. I think all the other factors like the discs and controller were ultimately minor. The Gamecube's real problem is that it offered developers nothing the other two consoles didn't already offer.
The Wii is I think where the truth really came to bare: The kind of console game market Nintendo wants is very different from what most of the dominant third parties want.
It's probably a schism that really started during the PS1 era. Sony and third parties were all about flashy, cinematic games that leveraged the advantages of the CD format. Nintendo's games on the other hand have remained heavily mechanic-driven and lean on presentation. I remember quotes from Miyamoto stating that he didn't like using huge amounts of voice acting for games because he thought it was a waste of disc space. The N64 was basically designed for that man's games, and Miyamoto has typically come off as someone who doesn't really care for the flashiness of modern gaming. When Nintendo and Silicon Knights split up, they officially said it was due to "ideological differences."
The other thing is that Nintendo has never really cared about making a platform specifically for the 16-35 male American gamer, which is where the PS1 started to take the industry. This means they didn't necessarily care about supporting games like shooters specifically. Guys like Iwata have repeatedly said they just want "fun games."
This basically continued throughout the Gamecube era and went into overdrive with the Wii. In hindsight, third parties were probably a bit foolish to bet as much as they did on the PS3 and Xbox 360. Just look at how many of them went under because of it. On the other hand, Nintendo was probably foolish to expect the likes of EA and Take Two to support the Wii's vision, since it differed so much from their own plans. Did Nintendo really think those guys were gonna abandon their whole way of business? Even if it might have been more economically sensible to do so?
Also, you have the western PC guard that recently invaded the console space, made up of guys like Epic, BioWare, Bethesda, Obsidian, and Irrational. These guys don't have a bad relationship with Nintendo because they don't have ANY relationship with Nintendo. Most of the aforementioned companies have never shipped a game for Nintendo hardware. They were all only making PC games during the time of Nintendo's console dominance. They occupy a world totally foreign to Nintendo.
On Nintendo's end, they, like Sony, were completely caught off-guard by the rise of the west this gen. They didn't anticipate the western PC guard coming in, and those guys sure as hell weren't compatible with what the Wii was trying to do.
And then there's online infrastructure. I don't think Nintendo has been unaware of the internet all this time, they just don't quite agree with how Sony and Microsoft are utilizing it. During the Gamecube era people at Nintendo (Iwata I think) stated that online gaming wasn't profitable enough, and that only a very small fraction of console gamers even used it back then (they were right).
Friend codes were there because Nintendo thought of online gaming as basically a secondary way to play with your existing friends. To this day Nintendo doesn't seem to completely agree with the system of paying a subscription to play with and meet new people completely online. Admittedly, friend codes were a fucking terrible way to do this. Shit, just look at how much Nintendo still emphasizes local multiplayer over online.
Anyway, to summarize, since the mid-90's you have:
-Sticking to smaller media formats to accommodate game mechanics over flashy media.
-Creating a console with a simpler control interface and weaker hardware in order to attract a whole new consumer base and encourage lower development costs.
-Emphasizing local multiplayer over online for philosophical reasons.
In my opinion what you have here is not incompetence on Nintendo's part, but an ideological war the company is waging against basically the entire rest of console gaming.
All the companies in the console retail space right now are all about bigger and better AAA games, and Nintendo seems to be vehemently AGAINST that kind of thing. They are also against targeting one specific demographic. They won't block those kinds of games on their platforms, but they aren't specifically trying to make a console where those games will sell either.
Just look at the third parties Nintendo is heavily supporting. They went and grabbed Monster Hunter, and they are deep in bed with Sega and Platinum. One of the biggest third party games Nintendo put front-and-center was Lego City Stories. They've been publishing western versions of Dragon Quest games themselves. Nintendo even offered to publish the Japanese version of Rayman Legends. Nintendo does try to put backing behind third party games, just only the ones it actually likes, which rarely, if ever, end up being a Call of Duty or Assassin's Creed.
Personally, I don't think Nintendo can ever fully repair their relations with the big western third parties currently running the show because of these differences. They just seem to want different things. Whether that's good or bad depends on what you want.
For Nintendo to become what the big third parties and a lot of gamers want them to be, they'd probably have to cease being the company that made so many of the games we love. On the other hand, the number of publishers willing to go along with Nintendo's way of doing things is shrinking.
In my opinion Nintendo has two options if they wanna get a lot of good third party support and still remain Nintendo:
1) Somehow get Japan fully behind the Wii U.
2) Gain the heavy favor of indies and hope they blossom on Wii U.
Japanese third parties are basically how the 3DS is kicking ass right now, and in my opinion indies are more similar to Nintendo ideologically than anyone else. Of course Nintendo's main problems are tearing Japan away from the 3DS long enough to notice the Wii U and competing with Sony's heavy push for indies.