Nintendo is clearly motivated by something other than profit. They release the NES Classic Mini, a license to print money if there ever was one, and it's impossible to buy one without hammering Walmart's private APIs with a script. Then, after a little over one season, they cancel the product entirely.
Perhaps Nintendo feeds on nostalgia brainwaves or something.
I've started to think that Nintendo's goal is survival, not profit. This is different than most American companies, and perhaps most companies in general. Profit and survival are, of course, related, but different things. First, I mean survival as-is, not just survival as a legal entity. So that means not laying off employees to survive. When the goal is survival, the risk-reward calculations may be different when you've got enough profit. It may mean not exploiting a cash-cow as aggressively as possible because after a certain point, the risk of over-extending yourself becomes non-trivial, and the extra profit is just racking up the score.
"I think we could have done a better job communicating that was gonna be a limited run," Scibetta told Ars. "It was supposed to be for that holiday. We extended it actually because demand was so much, then we stopped producing it."
Nintendo doesn't know how to run a business. They know how to make games.
It's a shame. Because, as you said, they could effectively print as much money as they wanted with a long-term production run of the NES classic and the obvious sequels for SNES, N64, and Game Boy.
It seems a little backwards though right? Imagine if they offered a Netflix-style service (or akin to PlayStation Plus).
They could grant access to their back catalog for something like $10/mo, and roll out segments of the back catalog over time to promote it.
Then use nostalgia-based franchise reboots and new IP (lol, but occasionally something like Splatoon catches on) to push new console sales and then slowly phase-out back-catalog support from older consoles.
You could time the phase-out with a holiday season 2 years into a new console (aligns with discounts and once initial new console buzz wears out).
Seems like a much more predictable revenue stream than hinging on the success of a new console.
You could also create leaderboards and niche competitions for the hardcore audience (Super Mario Maker has a sizable hardcore following).