I'm not sure I understand your point. As I understand it, Nintendo makes: 1) hardware, and 2) games. They are attempting to tie together the game and the hardware, so that if you buy the game, you also have to buy the hardware, in order to force people to buy more hardware, and not just buy the game and go to a competitor for the hardware.
But as often happens, a competitor came along - by producing an interoperable emulator which allows people to buy the game, but play it on different hardware.
I can understand why Nintendo would prefer not to have competitors, and how they might like to use their market power in the games space to crush competitors (FLOSS or not) in the hardware / emulation space, but they should expect to have to compete - that hardly seems like 'having a point'.
Apparently, under US law, an owner of a copy of software is allowed to make a copy if it is an essential step to running it on particular hardware, and that copy is not used for any other purpose: https://www.law.cornell.edu/uscode/text/17/117. So someone who purchases a copy of the game is allowed to copy it again for the purpose of emulating it.
And apparently, while the US has laws against manufacturing and making available circumvention technology, decrypting for the purpose of interoperability is explicitly exempted: https://www.law.cornell.edu/uscode/text/17/1201 17 USC s1201 (f)(3).
So using that law as a cudgel to prevent competitors from producing a compatible product is not really what the law was intended for, and I'd say this is bullying and abuse of process against a competitor.