> "They'd be cutting off massive markets where internet connectivity isn't consistently good (most of the world)."
With all due respect, countries without decent Internet infrastructure are unlikely to be places where there are plenty of people with the spare cash to blow on a console.
Furthermore, Nintendo has said that the NX is not designed to be a replacement for the Wii U, meaning that Nintendo may still plan to sell the Wii U, and therefore would have a product to sell in emerging markets (in addition to their handheld devices).
http://www.wired.co.uk/news/archive/2015-05/15/nintendo-nx-n...
"Following a Nintendo investor briefing, officially translated here, president Satoru Iwata says that although the NX will be "a dedicated video game platform with a brand new concept," he does not "intend it to become a simple "replacement" for Nintendo 3DS or Wii U.""
Carrying on, consider the following points from the GFK Research Group leak:
http://www.techradar.com/news/gaming/rumored-nintendo-nx-spe...
"Connect with other Nintendo players around the world via the Nintendo Network"
"Gameplay flows between Nintendo NX console and Nintendo NX handheld device"
"Supports 4K/60fps video streaming"
"Gameplay graphics at 900p/60fps"
> "Sure, Nintendo are struggling to find their place in the home console market right now but they're more conservative when it comes to changing the distribution/sales model."
Nintendo have been slow to develop their online offerings, but they're increasingly working in that direction. Nintendo is also keen to get into the mobile gaming market, which a game-streaming platform would help with:
http://venturebeat.com/2015/03/17/nintendo-and-dena-announce...
Furthermore, even if such a move to a streaming, subscription-based service would be innovative for Nintendo, the sort of 'Netflix for gaming' approach is nothing new in the market. Aside from OnLive as mentioned before, Sony are already doing it with PlayStation Now. Nintendo can learn from earlier attempts in the market, they don't have to go in blind.
http://www.techradar.com/reviews/gaming/playstation-now-1213...
Lastly, if you believe some of the rumoured specs (which I personally think are mostly driven by wishful thinking), the NX is meant to be 3x more powerful than the PS4. That sort of power only makes sense if it's a streaming platform.