I don't think it's unintentional in that they didn't realize what the image was, but they were probably referencing an already racist thing without realizing that attitudes about it have mostly changed.
Which, I mean
I suppose from the outside looking in, if you wanted to see if America still made fun of native americans and googled, you'd probably come away with the impression that we're all pretty fine with it.
Still a bad look and I hope they change it.
I can clarify this for everyone here. It was very likely unintentional. Here's why:
I lived in Japan for several years. Loved it, but one thing I noticed is that they are largely ignorant to the less superficial aspects of cultures other than their own. What I mean to say, is that they probably are completely unaware that this is considered a negative image. They see the Red Skins baseball team, and cigar store "indians" and all this "Americana" imagery, but they don't keep up to date on what is taboo and what isn't for Americans, because it is largely irrelevant to them in Japan.
They are, to this very day, mostly unaware that people of color and white people have racial issues, because it simply doesn't factor into their daily life. Same goes for aboriginal issues, same goes for women's rights issues. They are simply blissfully unaware, this is why they keep getting in trouble for stuff like this:
or this
or this ( they also had to change the character's age so they weren't 15 years old in the US)
Here in North America, we still, as of last week, sell this in Halloween stores:
I am Mi'kmaw, and so believe me when I say I am the first person who would be offended by something meant to be offensive. This little game and watch fellow is certainly not a pleasant image, but in no way is it intentional. Nintendo can't be expected to know the symbology of this image as it has nothing to do with their culture and history, and we ourselves, sell racist imagery like the costume above, knowing fully what it means to us culturally.
I hope they remove the little torch bearing game and watch guy, but I would ask, as someone who identifies as Mi'kmaw ( Mi'kmaq), that you try not to get too upset and angry, and instead try to explain this oversight to the fine folk at Nintendo.
In the future, if we (North Americans) want international recognition for what we consider culturally taboo imagery, we need to stop selling and promoting it ourselves. Otherwise we set a terrible example for what is and isn't acceptable. And that is how oversights like this happens.