Right, I feel their behavior is actually logical in a polarizing market.
You don't want to flood out titles that sell small amounts, because they start doing too poorly to make any money and take up resources that can be spent on higher margin products. You can then invest that money into making the higher margin products even better in an attempt to grow them too.
That said, what they *could* do is increase the number of high profile games they're releasing, which is the one thing I'm unsure if they're doing.
Like it's not unusual for them to release 3-4+ high profile HD console games in a year, but I'm unsure if they will keep that pace or higher on 3DS.
Edit: I guess the easiest to conceptualize way to put this is do you expect them to start making things like Final Fantasy Type-1, another Kingdom Hearts 3DS, Dissidia 3, things like Crisis Core, or other similar investment level projects beyond the scope of more Dragon Quest games and Bravely Default? That's a serious, not rhetorical question. Doing that would be my definition of Square Enix going in at the Namco Bandai level using their preferred development method instead of Namco's product-flood method.
I personally don't expect them to start making those kind of big profile games they released on PSP. With the exception of Kingdom Hearts: Birth by Sleep and The Third Birthday which was a failure, all those titles are related to the Final Fantasy franchise. Square Enix has apparently stopped developing Final Fantasy games on portable systems. The only announced title since the current generation started is Final Fantasy X and X-2 HD for PS Vita. And without the PS3 version I'm sure it wouldn't exist.
So, while with Dragon Quest they are following the same strategy that gave them so many good results in the past, we can't say the same with Final Fantasy. Cheap spin-off titles aren't appearing which is logical, but I find estrange that as Sammy Samusu said, Final Fantasy V Remake or Final Fantasy Tactics (specially the latter considering how well Fire Emblem: Awakening did) haven't been announced yet. And future announcements for these games are looking less and less likely, let alone bigger profile ones like Final Fantasy Type-0. Considering this I can only deduct that the have decided to practically halt, at least in the near future, all Final Fantasy related games on portable systems.
If they don't release Final Fantasy titles, the chance of another Kingdom Hearts entry is even more remote since Kingdom Hearts III must be their priority, and on top of it Kingdom Hearts 3D – Dream Drop Distance tanked hard, what other high profile games can they made?
A new IP would be too risky. They have been lucky with Bravely Default: Flying Fairy, it sold well for a medium-size project, around 300.000 units and the franchise has potential to grow. But these figures are far from what a big profile game like Crisis Core or Dissidia: Final Fantasy should sell.
Would it be wise from their perspective to release another The World Ends with You after the original game failed to sell 200.000 units?
Then, franchises that once were big, for example Seiken Densetsu, Valkyria Profile, Chrono or SaGa (should I include Star Ocean?) are completely dead.
So I don't know. I think everything we can expect by now from the current Square Enix is more and more Dragon Quest, another Bravely Default: Flying Fairy, and maybe, just maybe at least one Final Fantasy title, my candidate would be a Final Fantasy Tactics one.