I agree with this, and I'll expand upon it. What Nintendo have effectively said Is that should you indulge in piracy we will take away your right to use our services, now that is fair enough it is their right to do so and their duty to discourage theft. However, the way they have done this is by saying that due to your choice of illegitimate means we shall take away your choice of legitimate means. Essentially if you want to pirate then that's all you will do.
This is absurd, as firstly it essentially assumes anyone who pirates a game would not also legitimately purchase another game, which is wrong. I personally pirate games, however, I also purchase games too.
Secondly it also then snowballs the effect of piracy, with no legitimate way to purchase digitally, piracy then becomes the primary route of access to digital media. Not from choice, from necessity. Which financially only damages themselves and not those they are punishing in the first place.
The smart thing for Nintendo to do would have been a simple online ban for flagged titles. You want to steal games, fine, but you're not playing them online. However you can still choose to do the right thing, purchase games, fund developers.
Does Nintendo's stance discourage piracy in the first place? No, people who wanted to pirate games to any financial detriment to Nintendo are not concerned with purchasing any games in the first place. It simply removes the choice to continue to financially support Nintendo and it's developers, for those people who were willing to do so.
Removal of choice to do the right thing is not a punishment, it is a justification for doing the wrong thing.
