Furthermore the blue ocean strategy didn't work in the end because casual gamers moved on to mobile.
This is a bad interpretation of blue ocean strategy.
The blue ocean strategy is not about "casuals." It is about competing with product qualities that others in the market are not competing on.
The goal of blue ocean strategy is to
make your competitors less relevant because competing products are designed to meet different customers' needs. The more you design the product to resemble your competitors', the
worse it'll do because every feature you add to appease both kinds of customers is added cost that eats away at the value of your unique selling proposition.
From the perspective of your competitors, you're making a bad product for bad customers. This doesn't matter, since the goal is to attract and retain a new customer base competitors haven't gone after, not become better at stealing customers from your competition.
DS and Wii brought in tons of new players compared to the GameCube era. GameCube was unable to adapt to rising competitors; GBA did well, but also had no real competition until PSP came along (which explains why Nintendo introduced the DS). Some of them were the famous casual gamers or nongamers; Nintendo also targeted former Nintendo players through the VC and through sequels to established franchises. Sure, a lot of these players didn't stick around on dedicated platforms. But a lot of them did, too. They moved on either to 3DS or to PlayStation and Xbox.
3DS and Wii U were more descendants of Miyamoto's game-making philosophies than Iwata's. Miyamoto was the 3DS hardware lead, and contributed to Wii U's hardware concept as well. Iwata was a rubber stamp, but at the time, who thought Miyamoto would screw up so colossally? Neither of these was really a blue ocean product; 3DS was released during a time when stereoscopic 3D was being tested on a lot of fronts, and Wii U for all its uniqueness was ultimately just another HD box looking for a market - which is why the marketing for Wii U was so weak.
Switch is more of a blue ocean product than a red ocean one, but it's
not targeting nongamers. Instead, it's targeting
lapsed players who need a system that lets them play the kinds of games they want, the way they want. And because of DS and Wii there are an effing shitton of lapsed gamers who've played on Nintendo systems but moved on for whatever reason. In addition, Nintendo's also tapping into NES and SNES players, which is also something they did on Wii but something they can go way harder on since there is no short supply of indie games that are homages to those old games.
Moreover, it's a damn fact that maintaining a steady base of support on DS, Wii, and 3DS is the biggest reason why Switch is sure to get great third-party software support even while most AAA games will skip it.