so why does the Pokemon Company want to release a new game with new characters so often if:
a) new characters and pokemon have basically no impact on the rest of its products
b) constant new releases reduce the quality of the games and thus the customer confidence in the brand as a whole is reduced as well
On top of what
spookysocialist said, there's one specific reason.
The games are the "introduction" to the new generation.
The "Pokemon" franchise since its debut on the great stages always goes "Game releases introducing new mons / region / characters" -> Anime gets announced with new region and/or new protagonists -> New Pokemon and NPCs start showing up in the various mobile Pokemon games
With the merchandise (and the anime, obviously) already being "ready" probably months before the new games releases and basically having the stores on "put this on sale as soon as the game releases" which is likely what demands the strict release schedule.
It's a well oiled machine, and it's been functional to most degrees since forever. Changing it would require a new way to "introduce new generations", and honestly I can't think of one that'd make as much of a splash as the games do. Expecially as they are the one part of the franchise which has users of all ages and social status, whereas most adults do not interact with the anime or movies, and most kids are not interacting with the gacha mobile games and rely on their parents to acquire the dolls and whatnot, with the TCG being its own thing and generally only interacted with by competitive TCG players in first place.
It's also not even just used by Pokemon, other franchises that have been long going and have significant merchandise and/or other media related to them also "announce" the new entry via games first.
TLDR: Changing the "Pokemon machine" to not have the games as "launch platform" for a generation would require a massive restructuring which understandably TPCI doesn't want to do.
Also, an addendum:
Also you bring up "customer confidence in the brand" but pokemon game sales have gone up recently. SV and SwSh massively outsold every gen except gen 1.
While obviously true, I'd also add that Covid conveniently buffed the sales of SwSh due to the coincidence of the quarantine having people looking for ways to kill time while stuck at home. Hard to say if the Switch and Pokemon sales would be the same if the quarantines never happened obviously, but regardless fact is way more people than it would have happened normally got exposed to the game and franchise, most notably increasing the potential casual playerbase.
And the casual playerbase is the one that likes the games. While there is a very vocal minority that yells at "pokemon games stopped being good in gen 2 reeeee" on the internet, sales don't lie, and SwSh / SV were well received by the intended base. The main reason for which TPCI / Nintendo seem to aknowledge there is some issues with the release schedule is that people started to criticize that Nintendo, the company that's always been so proud of releasing fully functional games, is allowing Pokemon games to release in the state they are.
People used to say "There's Bethesda bad, and Nintendo bad. Bethesda bad are full of bugs and unplayable, Nintendo bad are stuff like Mario Sports which may not be a impressive game but it's still clean and functional". SV released in a pretty sorry state, I am not pretending it was a good release. Most of the problems got fixed since then, but while you could give some mileage to GF for SwSh as it was their first full 3d title, SV having the performance problems it had felt very unjustificable, expecially after Legend Arceus was running perfectly, and the Switch is host to games with much more demanding graphics like Xenoblade and Bayonetta, and much bigger openworlds like the two Zeldas, and those have no issues.
Nintendo cannot afford to be compared to the other companies, because the "perfection" of their releases is what they pride themselves on, so they have reasoning to not want to repeat the SV situation,
Obviously, it'll have to be seen if the gen 10 games will actually be performing, or will be another shitshow of performance problems. For what matters this could just be some PR to shut up people without actually doing anything, since as I said above, you can't just "delay" the pokemon machine.