Thinking back to the talking points in regards to the Splatoon/ARMS/Overwatch model being applied to Smash, most of the responses are thus far "they could easily charge and make money". That's true, but they could easily do it with other games. Blizzard could have done it, but it seems that the industry is learning from the ****ty tactics of EA and other companies..
Let me help you here and explain why it would work and what Nintendo gains from it.
In Nintendo's most recent financial briefing, they noted two way they are going to drive the install base. The first its new titles, the second was encouraging longer play of a single title. Here is what they had to say in regards to Splatoon
(see pg 5)
We are providing more downloadable content and hosting events that build excitement for our games to give consumers a fresh sense of enjoyment and extend the time they spend playing the titles they have purchased. The way Splatoon 2 is being played in Japan is an example of how efforts on the game software side can also impact the use of the hardware. The vertical axis of this graph depicts the number of active users over the passage of time across the horizontal axis. Normally, hardware use tends to drop off to a certain extent after the holiday season, but with Splatoon 2, the weekly number of active users remained high even beyond the start of the new year. Activity in Splatoon 2 is particularly high in Japan, but that same trend is now also being seen in other markets, so we intend to continue to focus on this area.
With Splatoon, notice how Nintendo is focusing on engagement over just regular sales. In fact, the graph they show has a spike in players in 2018. The game industry now emphasizes engagement as opposed to just sales. The reason is that more games are focusing on in-app purchases. Now, Nintendo hasn't done this beyond expansion passes, namely for single player content. But Nintendo does benefit in their own way. The first, which they mention, is increasing the install base as they make those major titles more appealing. This, by the way, also works well for Nintendo as their games tend to sell for a long period of time. The second has to do with online.
Now, Nintendo didn't just get the idea to move towards paid online out of the blue. Sony has been doing this for a while and it's actually a big reason why their gaming division has been so profitable. Even this last year, sales increased significantly despite shipping fewer consoles. To illustrate, there are about 18 million Switches sold right now. If half of those (10 mil) bought the 20 million dollar online, that would be $180 million dollars in one year. Best part, this happens every year. Oh, and this is with the Switch's much smaller install base. If the system sells as well as the 3DS did (roughly 70 million), and half buy the online, you're talking about $700 million.
So the intent is clear. Nintendo wants you to keep playing Smash. If you keep playing, you'll likely keep paying for the online. And how does Nintendo keep you playing? Consistent content updates. Smash Brothers, more than any other Nintendo titles, is perfect for this because Smash fans are rabid. Nintendo has the library of characters so its not hard to come up with more content. You mentioned Overwatch, and its the same system. Blizzard wants you to keep playing because if you keep playing, they keep selling you skins. For Smash, I expect it will have paid DLC, but it will be something like the Octo Expansion. I expect characters will be free for the reasons I mentioned above.
So the goal of Smash is, in part, is to keep players engaged so they'll keep playing online.
