Yeah, though I swear Piranha Plant is just Sakurai being his usual self and having a 'wacky, out-of-left-field character that no one saw coming..he always likes to add those..and I still disagree with adding it in tbh.. And although Piranha Plant does use spin-off moves, just like Princess Peach and some other characters, its still a main series character as it originates from Super Mario Bros. We haven't had a spin-off game character playable in Smash Bros yet, the closest we got thus far is Daisy, but she still originated from Super Mario Land and is also an Echo (I think Waluigi would have been included were he able to be a Luigi Echo)
I don't know Sakurai's views, but if I were doing Smash, I'd kind of want to add in Waluigi as a Wario character and be bugging Nintendo to put him in a WarioWare game at least to justify it..Maybe I'm weird but I feel like its somehow wrong to have a character so related to Wario be put in as a Mario character instead..heck, Nintendo themselves even got confused in one of the Smash previews and labeled Waluigi with the W Icon instead of the Mushroom Icon.
Waluigi doesn't appear in Wario games. It makes no real sense to add him as anything but under Super Mario right now.
I can understand that for, for say, Geno, since he can represent his own game or series. Or Tingle. But Waluigi doesn't have that luxury either. He's purely Super Mario at this time.
I honestly doubt Sakurai cares about "lol spin-off" at all. There's more important things, like how interesting the character can be. He's never suggested in any way that is relevant to his interests. Besides that, he wants to add Geno, a spin-off character by all means. It's clear being a spin-off is not a barrier in itself if he's willing to go for a spin-off character in the first place. Geno not being able to be added yet isn't some slight against spin-offs, it's always going to be difficult for licensing reasons alone. And I don't buy "it hasn't happened before so it can't happen now" as a legitimate counterpoint, so I'm going to shoot that idea right in the head. No, there's zero reason to believe he didn't add Waluigi cause "spin-off". I don't know where anybody ever got the idea it mattered in the first place. If there was no spin-off content in Smash in general and he never wanted Geno, yes, that might be a valid point. But that's not the case. He clearly is willing to add spin-off content(as proven with his own want of Geno as is), so I don't see how it remotely is relevant to Waluigi getting in or not. It's only reasonably something related to moveset issues, no personal interest towards the character alone, or Nintendo simply saying no. Nintendo didn't directly make the character, so it's not outright impossible they don't want him in certain roles. They sure as hell didn't add him outside of two Main Mario games as cameos at best(a costume in Odyssey and a costume in Super Mario Maker). So obviously he can show up in the Marin series, but as playable fully, it has yet to be seen.
And yeah, Daisy only got in cause popularity and an Echo to begin with. It was an easy addition. Waluigi doesn't have the luxury of being an Echo either, but he'd be in already if he could be. He needs an entirely unique moveset. There's simply higher priority characters from various other franchises too. Or ones who aren't a main character in any game(which is part of what Sakurai said about PP. I read the interview more clearly. It was "Hero or main character", basically). Waluigi, in a twist, is a main character... in one game(Dance Dance Revolution Mario Mix) so clearly wouldn't fit mold PP was for. It wasn't even "enemy mook the character" either. It was "non-Hero non-Main Character". You could've had someone, like say, Voldo from Soul Calibur, who isn't one of the main characters in the story, and he's no Hero, and it'd fit the same mold.
Worth saying I think PP is one of the coolest additions to the game. We already had mooks somewhat since most of the Pokemon were in(only a few of them were outright based upon anime portrayals, and sometimes very loosely like with Jigglypuff. Pikachu, Mewtwo, Lucario, and Charizard are clearly based upon their anime portrayals. Greninja really wasn't beyond one move animation, which was also in the games anyway, and only started to portray the anime version in Ultimate. Before that, essentially a generic mook. Ivysaur, Squirtle, and Pichu aren't based upon any particular portrayal, so are rather generic. Incineroar has a very specific design, though not anime-based. Definitely not a mook-based personality either).
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To reply to the above, finalized means this is when all the negotiations were done. They can't do much work beyond proof of concept till that character and all its parts are licensed.
It does not remotely explain when they decided to start working upon it. However, I highly highly doubt that Nintendo licensed Minecraft as a playable character at the same time as Banjo. That'd be two years in advance at least, before there was an actual Fighter's Pass 2. It would've been for something like Spirits or a Costume. And then later on they renegotiated to make him playable, if it was plausible they licensed Steve beforehand. It sure wasn't for playable, obviously.
More than likely they went to Microsoft for another character later on, and the extreme lack of Microsoft content more suggests they weren't able to ever get costumes or spirits outside of B-K anyway.