It is an interesting problem, and one that cannot be easily corrected. Whereas Sony and Microsoft publish very few (and even fewer decent) games developed internally for their systems, Nintendo is both a hardware and software company in one. Their franchises are the most revered in gaming history, they sell systems, and cause ordinarily rational folk to transform into raving lunatic fanboys. If a third-party decides to publish for a Nintendo system, regardless of the quality of the game in question, it has to directly compete against the best in the business. Why bother? Why not head to another system, and have the top spots all to themselves?
This is a fundamental issue with Nintendo as a company. In recent months, numerous reports have cited this as a problem in the industry, and a primary reason why many companies are hesitant to jump on the Wii bandwagon despite the rampant excitement and hype. Make no mistake: The Wii launch will be dominated by Nintendo titles. Twilight Princess, the most anticipated game in years, will easily sell multiple millions before years end; Metroid Prime 3 will also hit that seventh digit before too long. Though games like Red Steel and Dragon Quest: Swords have the potential to do well, there's no questioning they'd do far better in the absence of first-party titles.
Further down the line? It gets worse. Super Mario Galaxy should be released within six to nine months of launch, starring the most famous Italian this side of Da Vinci. Sometime shortly after, Super Smash Bros. Brawl will release, sequel to the best-selling Gamecube game of all time, sucking up gamers' dollars and time in a fashion reminiscent of a black hole. It's murder to have to compete directly against triple-A titles like these...for a bit of past reference, note the sales of the critically acclaimed Beyond Good and Evil as it was released amongst heavy-hitters such as Prince of Persia, Mario Kart: Double Dash, and Need for Speed: Underground in 2003. A beautiful and brilliant game, ground to dust by the competition. If you look at the Gamecube's top-selling games, you have to go nine spots down just to find a game that wasn't made by a first or second-party.
It's no secret that throughout the life of the Wii console, Nintendo will continue to push out million-seller after million-seller. So what can they do to coerce the publishers to return to their side? Easy ports are no longer an option, and Nintendo can hardly make development costs much lower than they currently are. It comes down to trust: can Nintendo leave gaps in their release schedule and trust third-parties to keep the stream of decent games coming? Certainly, they couldn't in the N64 and Gamecube eras. However, this time it's less of a risk: even going a month or longer without any high-caliber releases, Nintendo has the ability to draw upon their past catalog for distribution over the Virtual Console service. They need to approach Ubisoft, EA, Namco, and Capcom; they need to tell these companies that this quarter is yours to rule, and yours alone. Develop your game, set it free in a period of relative calm from the internal development studios at Nintendo, and watch your sales soar.
The Wii's launch lineup is powerful, as discussed earlier. While it may push third-party games to the wayside early on, the importance of a large install-base for a system is paramount. Even for the Gamecube, a relatively easy system to port to, companies simply didn't bother; there weren't enough units and buyers out there to warrant the extra programming costs. If the Wii sells comparably to (or, my gosh, even exceeds) one or both of the PS3 and Xbox 360, the industry can no longer ignore Nintendo's consoles as a viable source for profit. While straight ports may not be possible, the Wii is far more suited to simpler, cheaper games. The Wii doesn't require advanced graphical engines or a permanent connection to an online service, though those options are available; if Nintendo embraces the distribution of original, smaller-scale games via the Virtual Console, it becomes even easier for publishers to crank something out for a low price. It's working for Xbox Live Arcade, and Nintendo should follow suit.
Now, gaming industry at large, is the best time for you to jump in. Take your time and develop your games; lead the post-Galaxy/Brawl era on the Wii. Compared to the competitors, the risk is lower, the audience more receptive, and your programmers will enjoy the ease of coding on a familiar architecture. Your game won't need to sell at Halo levels to turn a profit, it just needs to be fun. It's a whole new ballgame.
No one wants Nintendo to cease updating their franchises or leading the pack in innovation...it's what they do best. But as we've seen in the past two generations, no matter how much Nintendo can pull out of their hat, it simply won't be enough without help. The success of the Nintendo DS is largely due to excellent third-party offerings: Sonic Rush, Trauma Center, Phoenix Wright, Meteos, and many others. Nintendo needs to gain this kind of support in the console business, and compliment their own incredible games with another line-up, just as amazing. You can do it, Nintendo. We believe in you.