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Over 500 fan games on gamejolt were copyright claimed
The problem is this kind of mentality is pretty outdated. While it worked really well in the early days of video games where you wouldn't want another company making a knock-off version of your game, the age of the internet has changed everything.
These days, fan-games and fan-content are HUGE. And you know what I'm including youtube and twitch streams in "fan content" as well because Nintendo clamps down on those as well. The fact is, ANY fan content is free advertisment for your game. there are several games I never would have bought if I hadn't stumbled across a youtube playthrough (and a few of those playthroughs later got taken down due to a copyright claim by Konami). Nintendo is fighting against something that should be seen as free advertisment for their products. they want to discourage it at every step. And the consiquence of this is going to be that a lot less people will be interested.
Fan games in specific are really good at maintaining an audience. You get some people who really like a certain game, but it takes time to make the next one. In the meanwhile, there are fan-games. these fan-games are never on the same level, but help to keep people interested and eager to see the next official game. Kill those and it becomes a lot harder to maintain that interest, since now you have to maintain it alone, instead of relying on the fans to keep each other excited.