Yeah, agree or disagree, we really don't know what if anything is holding Geno back, but based on the fact that he has a sizeable fanbase and Nintendo knows it (and acknowledged it with a mii costume), we have to conclude that SOMETHING is holding him back. At least for now. The rest of the DLC will tell an interesting story, that's for sure.
The whole SOMETHING holding Geno back is far more likely to be on Nintendo's end than on Square's though.
One of the areas I think I tend to diverge the most from supporters comes in how I analyze his chances. And the fact of the matter is that Geno's just never been in a great spot. What does Geno bring to the table, without stretching to apply him with more status than he honestly has? He's a fan request that represents Super Mario RPG... That's it. That's Geno's entire claim to fame and what he would represent.
It's difficult to make any claims about him representing Mario RPGs in total because he's from a single game and he is a less recognizable face from them overall given that fact. I see the whole, he can represent the time when Square and Nintendo worked so well together thing thrown around from time to time. But think about that for a second, do Nintendo and Square really care about representing that specific moment in their history, or is just having Cloud enough to really just say, "Hey, we're cool and working together." No other third party has a specific moment in their history really represented like that. It's just collaboration on their biggest titles in Smash, and Final Fantasy already fills that role.
He can't be promotion for anything unless Nintendo and Square have some specific ace up their sleeve with a Super Mario RPG remake or some sort of sequel. People can claim the SNES Classic, but the issue is that Nintendo didn't really take those systems seriously as Reggie says in this interview:
https://kotaku.com/nintendo-s-reggie-fils-aime-on-hopes-for-an-n64-classic-1830465672. They weren't meant to be some sort of additional pillar for Nintendo, they were stop-gaps planned in the transition of the Wii U to Switch era. He also can't just come back as a Mario spinoff character because that would require the approval and dealings with Square Enix for his every appearance. I doubt Nintendo wants to have to deal with a third party when making something like Mario Kart or Mario Tennis.
Geno's a tough sale with all that in mind. Sure, Nintendo and Sakurai have given us fan favorites, but as we're all painfully aware at this point, that means relatively nothing for the rest of them. No fan favorite is guaranteed a spot on the roster, and even such an easily accessible character with a big fan base like Isaac didn't make it in. Bandanna Dee isn't in the game and he's an actively promoted Nintendo character of the past few years. Those are just a couple of examples.
And then you bring Square into the mix. Nobody really knows the narrative on Square's involvement in Smash. We're all just sort of guessing and inferring based upon the current situation. If Square Enix is so bad and difficult to work with though, that definitely does nothing but go against Geno. People often present the fact that Geno's so easy as a positive virtue of his chances, but is it. If Square is such a pain in the ass to work with, Nintendo has no reason to want to even bother. Why go through all of the work to get just Geno when he doesn't do anything other than satisfy some fans? There's a lot of other picks they can choose that don't have the Square baggage at that point and will satisfy lots of people. Suddenly, him being easier doesn't mean much of anything.
If Square's mean amiable, then another issue presents itself. Square has lots of IPs to potentially choose from, many of which are extremely popular. If you've got Square on the line, I think it could be very tempting for Nintendo to go for something bigger at that point. Super Mario RPG's one game, Dragon Quest is a 30 year long franchise that has been massive in Japan and console RPGs owe their existence to the series. Sure, you can go for the fan option at that point, but I wouldn't be at all surprised to see Nintendo more interested in doing something shocking or "giving fans something they didn't even know they wanted."
I don't see either narrative as super beneficial to Geno to be completely honest. And this is all kind of a moot point though... Square already agreed to Geno in the past as a Mii costume. A company like Nintendo goes to ask Square for the rights to use that character and they seem to have had no issues agreeing the last time Nintendo went for the rights. Which then leaves us with Nintendo and Sakurai. For the reasons I've discussed above, I think Geno may be a pretty difficult sale or pitch. How do you prioritize him in that mess if you're at Nintendo, or even Sakurai potentially?
I bring all of this up to achieve both to establish the idea that Geno is far from some lock character without the supposed interference of Square and also to shed light on my own personal pessimism surrounding his chances. This post is not to act as an attack towards anyone or even one singular opinion really. It's also to attempt to work from the perspective of Nintendo and Sakurai who have much more to work with and more people to satisfy than just us.
I don't personally agree that they should come to the conclusion of "no Geno" even with all those considerations and I think they should 100% go for him. There's few other characters that would show a commitment to fan demand like including a character who has no other business being in the game and Smash seems to have only moved more in that direction for Ultimate. That said, for the reasons above, I don't necessarily blame anyone who may decide against him as well and could very easily see why they might just not consider him a priority.
And that's my thing. We just have to convince Sakurai and Nintendo that he needs to be a priority. Because as soon as he is, he'll be in the game. I'll be honest, I have no idea what that entails. The most logical path to me is to just keep growing the community and not giving up the support for Geno. Even if I'm pretty pessimistic about his chances at this point, I'm still talking about him and willing to do whatever I can. We've seen the community grow a lot around Ultimate, and stuff like the tons of fan art can help raise heads. I think we have to just be persistent. That can be a thankless task, I'm well aware, but it's part of sticking to a character no matter what. Square doesn't have much of a stake in Smash. Directing our efforts toward them isn't going to help much unless we get some sort of indication that they do need further convincing for Geno's inclusion. Until then, Nintendo is and always should be our primary target in directing love and energy for Geno. He may be a tough sell, but that's why we love him and that's why we'll keep pushing.
And there are some hopeful signs right now. The Super Mario RPG references are starting to feel a little like a lot of smoke, so the question is if there is an actual fire coming later in the DLC is a more interesting one. He's still an old guard fan favorite, so his name and awareness have been kept up to varying degrees since his heyday (which honestly is probably eclipsed by the current moment) during Brawl. We've seen lots of strides toward making fan favorites playable, so that's only good news for him as well. I'm not yet convinced he's not DLC. I'm super optimistic about him, but I'm not throwing in the towel yet.
Sorry for the long post again, this is probably the rawest display of all my thoughts surrounding Geno in a very long time...