It's not about actual value or profit.

Yes it is. It always is.

It's about the PERCEIVED value of Nintendo's brand. Stopping production makes the NES Classic a rare item and the high demand for it makes people seek it out and willing to pay way more than it's worth.

To you as someone who's more interested in playing the games on the NES Classic than in just owning one because it's a hot ticket item, yeah it doesn't seem like a smart move. But to the average idiot consumer who doesn't know anything, it's a collectible item worth paying extra for because they don't make it anymore and was super popular when they did make them.

Companies that maintain artificial scarcity do so for two reasons: to maintain a brand or culture of exclusivity, or because it projects into more long-term profits.

Nintendo is not Prada or Lamborghini. They are not selling luxury products to the rich, so scarcity for the sake of scarcity doesn't apply here.

That would suggest they see more long-term profit projections by maintaining artificial scarcity. Apple does this masterfully: for the past decade they've been understocking products at launch to increase perceived value. The key is that they then ramp up production and start cashing in that perceived value for actual value.

Nintendo has never done this. Is their brand important? Sure, but that means that they're not going to license cheap Amiibo knock-offs to the Chinese, not that they're Prada. What bizarre profit projections mean NES Classic shortage for half a year equals more profit?

They're a publicly-traded company, they have the pressure to maximize quarterly returns. Maybe they're just really, really bad at projecting consumer demand? The past 30 fucking years would seem to indicate such.