That would all disappear if you could side-load any content.
It's the fact that Nintendo, Sony etc wouldn't be able to enforce any licensing revenue since users could just install any game directly.
For Nintendo it would decimate the company since it's their primary revenue stream.
Random sideloaded games are just irrelevant when people are buying the systems for Zelda and Pokemon.
Nintendo charges 30% on the sale of every game sold.
Looking at the current best sellers [1] they would stand to lose a significant amount of money.
Easily in the billions based on current revenue.
[1] https://www.nintendo.com/us/store/games/best-sellers/#sort=d...
I think the benefit of being in the Nintendo store is far higher than that, and they'd do fine. And they have lots of first party games too.