This may be partly true, but they themselves did publish Yoshi's Story, a 2D game, in 1997, the second year of N64's existence. More likely explanation is that

This may be partly true, but they themselves did publish Yoshi's Story, a 2D game, in 1997, the second year of N64's existence. More likely explanation is that 3D was so novel and new in the mid 90s that it was difficult to argue for 2D games then from a business and marketing standpoint, even though 3D games usually required larger teams and the lack of mature tooling (a lot of devs would have to make their own physics engines from scratch back then) made it riskier. Today Nintendo puts a heavier focus on 2D gaming, with the New Super Mario Bros series and Mario Maker, etc.