This is something I've wondered, are console software sales higher returns/yields than handheld sales [development factored return per sale]? (Or is it to do with losses/fees on ROM cartridges? In which case its higher returns per sale on disc press variants as less is lost per sale.) Does this carry over when you factor in budget comparisons of releases (as well as frequency)?
Handheld development budgets themselves probably aren't small (anymore) but I'd imagine they are still considerably smaller than that of a console release, regardless of quality or HDness.
If the loss per sale is lower for consoles, then it might explain why we see movements as we currently do (outside of bags of money). Even if you can't reach "hit" status, what you sell + not losing more on cartridge prices, is enough for satisfactory RoI even with increased budgets of development (though you spread risk by throwing it on every suitable piece of hardware as well). Of course my numberless math here may be off the deep if I am overestimating how much a ROM cart costs to produce.
Does Nintendo offer to waive cartridge fees for big profile games? Or at all? (And do we have comparison between disc pressing (which I am sure is on the order of tens of cents for Bluray) vs. ROM carts?)
I'm going to use numbers for the US market since I'm not entirely clear how it's priced in Japan, but I imagine it's similar.
In order to press a disc for PS4/XB1, you're charged $10-12, but covers the cost of materials (very small) and about a $10 license fee to Sony or Microsoft for the ability to release a game on their console. This is a big part of how they make money with break-even or loss leading strategies and why they release consoles in the first place. You get charged this fee regardless of whether you're charging $20 for your game or $100, and regardless of whether or not the game sells.
Now, this part I'm not as sure about because executives and analysts haven't talked about it as much, but essentially the setup for handhelds is similar, but you're effectively paying a lower price for the license fee and more for the physical media. Since it's just an up front cost-of-goods charge to print a game either way, it doesn't make a difference from the publisher's perspective - unless they're ordering an unusually large cartridge - at which point the cost goes up and they will often charge more for the game to compensate.
As such, I'd be surprised if companies were making notable decisions based on production costs. One benefit of consoles is that you can often charge more money for your game, but the trade-off is you're hitting a smaller total audience, and usually you have to spend a bit more to make the art assets/technology reach an acceptable level for release.
One thing that could be happening incentive wise is, let's just peg the cost-of-goods setup for a PS4 game as $12. Sony could sit there and say "Hey, if you release your game on PS4 and only other PlayStation platforms in Japan, we'll only charge you $6 per disc and we'll include you in our general platform marketing. We'll also work with you to help make the PS4 port of your game as easy as possible. The license fee break only applies to your first game per series on the platform." The former would involve Sony still making quite a bit of money (discs are really cheap to produce), but give the developer and extra $6 per copy sold, and the marketing would include things like being part of an ad campaign they're running on TV, a Sony PlayStation paid ad run in Famitsu, or having your game appear in their paid retailer floor space marketing.
If you're a game with expected sales of 100,000, this could be pretty appealing. If you feel you'd sell about the same on 3DS and Vita/PS4, you'd get $600,000 extra in game profit, and they might have sufficiently covered say $50-$100K of your marketing cost or something. Even if you had to spend that same $50-$100K getting the game on PS4, this would still be worthwhile. I included the part about the license fee incentive expiring since they're obviously not going to cut the price forever, as its their main source of income. They might lower it to something like "And we'll still give you a $2-$3 discount." later on to make sure the incentive stays, but the basic incentive for the parties involved is the first game incentvizes fans of the series to pick up a PS4, while the developer gets a financial buffer and a larger risk amortization when they first have to uplift their technology and art assets to "PS4 quality".
However, as you may have noticed, these are small numbers. This is the kind of incentivization that's primarily attractive to studios like Nippon Ichi, Nihon Falcom, lower end licensed games, and similar such products. In these cases you're basically incentivizing developers to choose PlayStation as their base and/or port what would normally be a Vita-only game to PS4. If you have a bigger mid-tier series or a blockbuster franchise, what matters to you way more is finding the biggest and most appropriate audience for your product.
You can see this to be relatively self evident just looking at the line-up from big Japanese publishers. Most of them actually have very reserved line-ups on PS4, and only (or at least overwhelmingly) only put out products that are safe bets and conceptually best fits for a PlayStation console regardless of any incentives in place. If we wander over to Namco Bandai's line-up, games like Tekken, Tales, Naruto, and Dragon Ball were always going to have console entries.
The company most of the thread seems to obsess over when they see this is Square Enix. I'd first just like to take a moment to point out that, while they're around 50-75% of what NeoGAF focuses on when talking about Japan, they're not actually 50-75% of the market. They're a much, much lower percentage than that. Also, the fact that we talk about and focus on them so much around here actually reveals the real reason they're doing what they're doing. When we look at Square Enix's announced PS4 line-up, it overwhelmingly consists of games that you would expect to be on PS4. With the exception of things like World of Final Fantasy, if we look at each individual product, choosing PS4 as a platform is not an unusual or surprising choice. What is unusual is that they're choosing to greenlight so many games for a platform that is failing in Japan. Getting back to what I was saying earlier, if we look back at what made Square (Enix) a titan in the PS1 and PS2 era, it wasn't just that their games sold very well in Japan - this was true for many companies - it was that they sold very well in Japan and sold even better world wide. Now, while the market has changed radically since then, given the venue that Square Enix is announcing games like Final Fantasy XV, Kingdom Hearts 3, Final Fantasy VII Remake, Nier 2, Project Setsuna, and World of Final Fantasy at, it doesn't take very long to figure out who they're hoping the game will sell well to. We even had the announcement of Star Ocean 5 for the West well before we normally get this type of product confirmed for international release. Square Enix is essentially hoping to go back to the days where their products do very well abroad, because they know that even with the changes in the market, their titles are at least still frequently talked about outside Japan. The dedicated market is also shrinking in Japan, with consoles being nigh moribund, so if they want to keep investing in the high production value arm of their business, they don't have any other choice. By comparison, it's completely unclear when any of their Japanese mobile titles will come over, as those are targeted distinctly at Japan. In addition, they still make 3DS games - the leading dedicated platform in Japan - when a game is both expected to overwhelmingly sell in Japan and the platform is the traditional fit for the audience. See games like Dragon Quest Monsters and Dragon Quest VIII as examples of this, while titles like Musou are seen more as games for PlayStation console. Now yes, it's possible we're about to see Dragon Quest XI show up on PS4 whereas it would make more sense on 3DS, but it makes far more sense to gaze across the whole strategy and look for patterns and then try to explain the anomalies than to look for the anomalies to generate the pattern.
Anyway, overall I don't think the profitability of console games versus handheld games is a driving factor of any perceived changes in output strategy. Otherwise we'd be seeing way more publishers and independent studios shifting this way. Instead, we see very limited examples of this, so the best way to uncover that is to separate developers/publishers into categories and try to find the patterns within them to uncover what the root cause for each is likely to be.