The problem is innovation does not sell. People don't want to buy something "explorative"
Every time someone says this I wonder if they understand what innovation even means.
If you innovate and it works out well it puts you ahead of the competition. It doesn't matter if people care about the game purely because it's innovative, if you made progress with your innovation you will be rewarded for it because whatever innovative mechanic you put in your game just flat-out makes it better than everyone else's.
That doesn't mean 100% of your output needs to be new and creative and inuitive as a studio, but it does mean that at least a small percentage of it should be experimental to try and get ahead of the game. Experimental games are a gamble, but when they work out they really, really work out.
So the question is, why isn't the AAA industry attempting to make experimental games? There are a slew of reasons as to why this continues to happen if you want to get into it, however none of them are "they just won't sell."
Look at Call of Duty. They added a mode where you battle aliens instead of zombies? People blasted it. It's not what they want.
That's... not innovation?
Realize that the call of duty business model, much like guitar hero before it, is actually made around the series dying. Ever since around modern warfare 2 they've known that they're crashing the series into a ditch, and they're fine with it because the path to the ditch is made out of money. They simply make the same game and change something relatively insignificant every time, and right now they're approaching critical mass where the only way to sustain the franchise any longer is to change or add something random and hope it works, because making modern warfare again without any camouflage isn't working. That's why the story is going insane with dogs and space and shit, and that's why the aliens are there.
For example, DudeBros who buy Fifa 27 and Call of Duty is a market. NostalgiaFags who buy every Mario and Sonic and then complain on the internet. Casual Gamers who have all 256 Angry Birds games on their phones. Ones who play for story, ones who play for gameplay, ones who don't play at all.
What the hell do demographics have to do with anything...?
For the record, the mobile game guys are innovating way way way way way faster than the entire AAA industry, in all sorts of different directions, and they're selling games at like 20 times the pace that AAA's are. I mean, zynga is an entire company built around copying other people's innovation.
Nintendo is now a very niche market. It's no longer the dominant in-everyones-household thing that it once was.
WH-WHAT? Nintendo is NICHE? I'm not sure if you've noticed, but literally everyone owns a wii. They aren't fucking niche. That's a shitty excuse for poor sales if I've ever heard one.
And by the way, guess why the wii sold so well? Innovation! It was a genuinely novel idea! But no, innovation doesn't sell, that can't be right.
Is that a problem? For me, it isn't. I am in that niche of loving everything Nintendo puts out, regardless of reviews. Call me a fanboy, go ahead, I won't deny it. I will keep supporting Nintendo because hey, I like what they put out. Are they making the best decisions? Of course not. But is sitting around complaining going to fix them? Nope.
That would be a good argument if I was attempting to fix nintendo through arguing over the internet. Thankfully I am intelligent enough to know that Iwata isn't reading this thread and taking notes.