Nintendo: "Also, we'll sue you for pirating games we don't sell anymore, because we might want to rent them to you in perpetuity instead."

Exactly. Nintendo has targeted game styles that are largely being shared by smaller developers. AAA devs pretty much have to push visual boundaries in order to sell consoles while Nintendo focuses on whatever new major feature their newest console has (Wii: motion, WiiU: semi-handheld, Switch: hybrid handheld). Nintendo hasn't tried to compete with the big consoles at least since Gamecube. And their focus on few, high-quality titles for first party series means they have nearly guaranteed success every console generation (actual guaranteed success with pokemon).