On the contrary - I'd argue that what has almost peaked is the capacity for Smash to expand its audience. It's already the biggest fighting game series out there and Ultimate is the best selling FG of all time. When it comes to representing more of the gaming sphere, the only places Smash hasn't really gone to are a PC rep, a Sony rep and a mobile game rep... and that's about it.
Some of my most wanted characters include Sora, Crash and Phoenix Wright, but I'm not going to pretend that any of them would suddenly make an entire fanbase buy Smash - because chances are they already have. And if only "the biggest characters that could expand the crossover the most" could get in... we'd have to say bye bye to about 70% of this roster, really. And Ultimate would have been a way worse game for it.
I'd also argue that there is a big difference between someone like Chibi Robo and Waluigi or Toad. But that's another can of worms entirely.
Nah, we haven't even touched Western gaming in the slightest, so there's a massive amount of room to cover there and Japan is far from tapped in terms of its biggest and most successful IPs. There are so many genres that haven't been touched or just barely investigated from a Smash perspective like Puzzle games, Horror games, First Person Shooters, Visual Novels, etc. Incredibly popular genres and franchises across gaming, so we're nowhere near the capacity of popular IPs across all of gaming.
What we are near, however, is Nintendo's current capacity for more wide reaching IPs that they are actively interested in promoting and developing. Series like Advance Wars, Sin and Punishment, Golden Sun, Chibi Robo, and Rhythm Heaven are all respectable series, but only one of those has had a recent entry and isn't very much dead right now in Nintendo's world of IPs and only one provides us with a fan favorite that would really push those headlines and satisfy such a large swath of people. It's the issue of diminishing returns as I've always said with most of Nintendo's IPs,
and especially in regards to the 4th most popular character in a smaller series already in Smash. Now, how does Nintendo get around that? Make new characters that become more widely popular or popularize existing characters.
We already see that reality with Ring Fit Adventure being one of Nintendo's biggest surprise successes of the entire Switch generation. We've seen ARMS be an IP that they've clearly decided to continue investing in and push to Smash. Splatoon was a massive hit that practically begged to be in Smash. They've basically willed Bandanna Dee into being a popular character by making him the 4th "main character" in Kirby in recent years. First parties can still absolutely be draws to Smash, but they have to be characters that are either sufficiently popular with large swaths of the fan base or characters that Nintendo is interested in pushing and actively developing for. And that's where we're reaching the "limits of Smash." There are still additional characters you can from existing franchises and there are series not yet in Smash. But, we're already seeing diminishing returns on requested fighters I think just based upon how only a couple of character specific fandoms have been able to compare to the titans of the past and newer fan requests seem to struggle more to get people on board and/or organzied. And we've been exhausting the characters Nintendo is interested in pushing and funding as IPs too. It's been 20 years since Waluigi debuted and he's never been pushed in anything beyond spin-offs. Golden Sun hasn't been back in a decade after a failed attempt at a revival and the company that makes it arguably does loads more making Mario spin-offs ironically for Nintendo.
I'm not saying limit Smash to only "the top of the top" or the "best of the best", but with new characters to develop interest in the game or retain larger portions of the player base across years of DLC, I think you do need to do more than just pick the hidden gems of Nintendo's extensive character library. When Nintendo is picking characters, they have to have some incentive to do so, and that can be pleasing fans to personal biases for characters and franchises to simply promoting or working on a brand. But if a character doesn't have that? I think you're going to see much more up hill battles for them as playable in Smash. Sakurai himself has the potential to make other decisions, but he's also not going to go all in on more and more obscure picks either. Smash is still a product of advertisement in many ways, and it's important to remember that.
