Charging a tiered service will probably be the best solution going forward if they want to continue this model. You pay extra and you get more games available to you and Nintendo doesn't have to drip feed as much or worry about over or under valuing games/properties. People will complain anyway, but there will be a broader choice of selections if you're just looking for online or are serious about retro gaming.
I've always wondered if there was an issue with the hardware or something with putting stuff on the NSO. I remember when 3DS came around and while there was the Ambassador's Program that gave 10 GBA games, the 3DS didn't get GBA games for VC at all compared to Wii U and the GBA games from the program couldn't run some of the stuff that normal Virtual Console could do like Save states and whatnot. But I don't see why this would be an issue with the Switch.
Maybe it has something to do with the Online for the games? One of the things that was promoted was that NES and SNES games with multiplayer had online multiplayer. And online multiplayer would be huge with games like Mario Kart 64 or the GB games that relied on link cables. But maybe trying to actually program online multiplayer into those games is a lot harder than it looks?
I know that there probably isn't any deep digging needed and it's just as likely Nintendo being corporate with their stuff, but I'd be lying if I said I I wasn't curious on why they haven't gone further.
I remember hearing at one point that there was technical issues regarding the GBA games on the 3DS in how sleep mode works, which is why they didn't do anything after that. I'd have to dig up the Retronauts episode regarding the 10 year anniversary to remember the specifics.
N64 is pretty much a lost cause at this point unless they are brought back as VC downloads separate from the service like Doom 64. I'd honestly bet on a N64 Mini Console before a service at this point.
1. N64 emulation hasn't been perfected unlike most Nintendo systems.
2. The odd control scheme would limit what can be done using the Joy-Con alone (not a big deal for most, but marketing/branding)
3. The most popular games are multiplayer based.
4. Certain prior service features might be harder to develop such as online co-op and rewinding.
5. Super Mario 64 was already re-released as are a majority of the reasons to play the first Mario Party games.
Post N64, I don't think Nintendo would be in favor of re-releasing for pennies on the dollar as apart of a service. I think we will at best get a GB/GBC online service before the Switch's lifespan finally ends. I'd assume it's a lot harder to negotiate terms for an online service than it is to have companies directly sell titles themselves and it doesn't help that a lot of 3rd Parties like have been re-releasing games more on their own terms prior to the service's launch; only SNK has double-dipped with Crystalis (which you should all play BTW).
I'd be extremely curious to know the sales figures for the 3DS VC and Wii VC. Part of me gets the feeling that aside from Pokemon, there might have been a sales dip with how slow the 3DS VC was to pick up and how late SNES titles game to the system. It could also be that with the retro craze having skyrocketed post 2010, it might have been harder to get titles on the service once companies realized the value of their old properties in most circumstances. It could also have been just how big the Wii itself was.
Hell, didn't they just recently update their FAQ stuff to basically say "If you wanna play old games, go buy em 2nd hand"? Which is like, they get 0 profit from that so it says a lot.
I mean, most stores will tell their customers to shop elsewhere if they don't already offer what is being looked for. That's just customer service 101. I don't think that statement really means anything in regards to their priorities as a company or upcoming plans.
With all the open jokes there are, the only game I'd say that FAQ definitively applies to is Mother 3. lol