It's important to understand the history and context of the industry that Nintendo operates in.

The 1983 video game crash was very real and devastating (at least in North America). In 2 years, revenue in the industry dropped by 97 percent. A number of problems were identified as causes -- like most things there is no single cause. But among them was poor quality control of games produced by third parties all producing an unlimited number of games. If 90% of everything is crap, in 1983, 99% of what was produced was crap because there was, at least up to 1983, no incentive to produce quality. In 1986 Hiroshi Yamauchi, the president of Nintendo at the time said, "Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games."

Nintendo, in 1983, had just released the Famicom and also was struggling with unlicensed games produced by third parties with poor quality control.

When Nintendo decided to, against all apparent sanity, sell into the North American market in 1985, they made several key platform changes:

1) The Famicom changed from a "video game system" to a home entertainment and computing toy and was shown at trade shows with accessories from keyboards to robots and no joystick in sight. To exhausted and bruised retailers this enabled them to position it differently than Atari's previous products.

2) They fenced in 3rd parties with strong licensing agreements, limited publishing rights (only 5 games per publisher per year), centralized control of product manufacturing (Nintendo made the cartridges and the publishers had to eat whatever cost Nintendo sold them at and a host of other restrictions. Any publisher who couldn't agree to this either went separate ways (Namco was a famous case) or was sued out of existence by a very litigious Nintendo of America.

3) They enforced the agreement with a lockout chip (10NES).

4) They rigorously playtested all published games for strict QC. It doesn't mean unfun games were released, but games released for the U.S. NES tended to be generally free of major bugs.

5) Games were reviewed from content. Pornographic, overly violent, religious themed games or items in games had to be modified.

With this strategy, Nintendo hit the market in '85 and basically single handedly revived the entire North American market. There were a handful of unlicensed 3rd parties (Tengen, Color Dreams, etc.) but none of them became major players at the time.

While some of these 5 points have eroded a bit over time, they formed the basic business framework for competitors to either adopt or attempt to exploit. For example, the basic licensing model, QC and content provisions became Sega's framework for the Megadrive/Genesis while they relaxed the content provisions a bit to drive marketing during certain game fads (Mortal Kombat).

Sony famously used a similar model, but then one-upped Nintendo on licensing deals and manufacturing costs to lure major third parties away during the N64/Playstation 1 era leaving Nintendo with a set of very 3rd rate 3rd parties and expensive to produce cartridges. The Playstation on the other hand had over 2500 games.

In Japan, NEC adopted a very open publishing platform with the PC-FX, which basically turned into a platform for pornographic anime FMV games and died a quick death. Back in the West, the CD-i and 3DO platforms attempted completely different strategies and also died quickly and Atari gasped for life a few times before their own poor QC killed them off. All of these cases provided more data points that Nintendo's basic framework was prudent and any modern strategy should be variations off of that work.

The large number of games for the PS1 caused its own set of problems as Sony also was starting to deal with QC problems by the PS2 era (which had almost 4,000 games released for it). However, Sony's response has been less focused than Nintendo, part of that is because the modern industry has more viable competition and consumers can "jump ship" so to speak between a handful of equivalent consoles. By the PS3 the game count was down again to PS1 levels (the PS4 is at about the same).

Microsoft has their own variation which is more of a response to Sony than Nintendo. By the Gamecube era, Nintendo was seen as an also-ran, stuck with a hard-lined approach to the industry that had benefited but no longer needed the 5 point approach Nintendo had used to resurrect the industry.

For the Wii, Nintendo finally learned, opened up and while still requiring licensing agreements, set a tone more like the first generation Playstation and ending up with over 1500 games for it. However, quality among 3rd parties dropped precipitously.

Nintendo bungled the Wii U, and despite similar library sizes, the Wii had earned a reputation for really unfun shitty licensed tie in games and consumers moved away.

It appears that Nintendo is returning to some other strategy with the Switch. Top-tier 1st party hits, great 3rd party games at the top end. And then filling out the lower tiers, casual games, indie games, multiplatform games and so on. There's already almost 600 games for the platform and it has a reputation for high quality titles -- correcting perceptions around the Wii.

So the basic premise is that if console makers are struggling with crap in their libraries now, they can't tolerate the abysmal piles of pornographic garbage that will clog up store shelves if they don't attempt to control their platforms because that lesson was learned in '83 and again in the 90s (with the PC-FX, 3DO and CD-i). Lockout chips partnered with legal protections like the DMCA build protections they feel will keep their industry viable and history has shown that in the console market at least this is critical.

The PC market has no such controls of course, but the consumer type is very different even if it looks superficially the same.