I don't even know that it's that long-term of a mistake. We can expect professional quality Let's Plays for Nintendo games to die off almost instantly (since it's no longer a profession if Nintendo takes all the revenue), and for the people who do them to switch to non-Nintendo games.
In other words, they aren't even going to make very much money off of this in the short term, and they're driving the free advertising to their competition.
I don't think YouTube ad revenues are going to keep Nintendo from circling the drain. Seems like classic corporate overreach and shooting themselves in the foot.