Don't forget Terry and his franchise is really popular in Latin America.
Yeah, but he wasn't a hugely requested character in general. Terry just got in without any significant push, more likely due to SNK's legacy as a fighting game company rather than his Latin America popularity (Terry was kinda like Joker in the way he "blindsided" everyone because no one in the Smash community expected them to get in).
His popularity in certain countries definitely helped him, but he was still likely added due to his Japanese legacy that continues to this day.
I feel like Sakurai made it relatively clear that Nintendo/the team/he was wary of working with Western Developers because of the fact that negotiations were apparently more difficult than Japanese companies, but everything with Rare went super smoothly according to him. It's blatantly clear at this point that pretty much every company under the sun has indeed been approaching Nintendo about Smash Ultimate over the past several years, including western ones. I mean seriously, we just got a Vault Boy mii costume. There's no way in hell we go 5 more characters without atleast one third-party from a western company, I can't see it. Two is more questionable but if it's one from a company Nintendo has already worked with on Smash like Microsoft? Seems a bit more feasible doesn't it.
Yeah, Sakurai has made it clear that he wasn't working with Western companies due to the harder time coordinating, so we can expect some more Western characters/companies to get added; but even then it took Banjo (who arguably had the most vocal fan support of any character at his peak), for Sakurai to work with Microsoft. However, at the same time Sakurai has also said in the past he's happy to use Smash as a platform to raise awareness of lesser known Japanese IP's worldwide as well, even if said IP's are niche outside of their own dedicated fan base, kind of like Fatal Fury/Bayonetta. So to me it sounds like he still prefers working with Japanese IP comparatively to most Western ones.
Both Crash and Master Chief have their own problems in their own ways. Crash would be a
completely new 3rd party and just because Microsoft worked well with Sakurai, doesn't mean that Activision will too. He also doesn't have the extreme vocal support that convinced Microsoft and Nintendo to work together. It doesn't help that Crash is decently niche in Japan nowadays too. On the other hand, Chief is with Microsoft which works in favor of him. However, unlike Crash, Chief doesn't really have the
Japanese following of Crash, and he never was as big as Crash in Japan in his prime. Minecraft Steve oddly works well in terms of a Western character circumstantially because he is still with Microsoft, and yet also has a big Japanese following in general to this day.
So I can totally see Western characters getting in, but that also doesn't mean they HAVE to be fighters either. Sans, Cuphead, Vault Boy, Altair for example were all relegated to mii costumes (and Fallout/Assassin's Creed is a pretty big Western series too). It would be lame sure, but what's stopping them from making Crash, Master Chief, Doomguy, Dovahkiin, or Minecraft Steve from
just being Mii costumes; which I feel like is a completely possible outcome (maybe not all, but some of them getting in... as costumes).
I mean Assassin's Creed is far bigger than most other Western series in Japan (big enough that Odyssey actually released on the Switch only in Japan as a cloud streamed game), yet it got costumed.
I just think we should be considering the possibility that a lot of Western characters maybe even
fan-favorites like Doomguy, Crash, Master Chief, and Steve will just end up getting costumed because Nintendo is clearly not averse to doing it and they clearly don't view it as a bad thing either.