I mean, if Microsoft wants to do a crossover, but not a platform fighter that competes with Smash Bros, why not a 1st-Person/3rd-Person Shooter Crossover? Because like, why does it have to be a platform fighter? Like look at how many FPS' they have now, as well as games that focus on 1st-Person/3rd-Person perspective or can fit in a 1st-person setting.
Halo, Call of Duty, Elder Scrolls, Doom, Fallout, Overwatch, Gears of War, Perfect Dark, Quake, Destiny, Dishonoured, Wolfenstein, Prey, The Evil Within, heck, even the more cartoony ones like Banjo-Kazooie and Crash Bandicoot can fit since Banjo has the 1st-Person shooter moments in Tooie and Crash has the bazooka. Conker also had the 3rd-person moments with the shotgun and Matrix-moments. And other games like Warcraft, Starcraft, Diablo and Skylanders also have characters that have guns or focus on ranged attacks. And I don't see an issue with non-FPS games like Battletoads or Killer Instinct getting in.
Like I think they could make a crossover 1st-Person shooter game that can be honest to the characters, make them all fit together and be just as wild and wacky, just like Smash Bros. is. They also got the experience since they have alot of developers that have worked on FPS games. And there would hardly be any competition since I don't think there are any 1st Person Shooter that focus on the Crossover aspect.