Here’s a very long, quite good post on Nintendo’s strategy with the Wii: http://malstrom.50webs.com/birdman.html
The thesis is that the mainstream video game market arms race of every-more- complicated games ended up overshooting enough of the potential game market to allow an opening for simpler “down-market” games, and that Wii was able to exploit this opening. The article predicts that Nintendo will now move up- market, producing more complicated games over time, pushing PS3 and Xbox 360 into very up-market niches. Sort of how consoles took over from PC games.