Why would they say no though? I don't care for Geno but it makes no sense.
They aren't using the character. They have most likely no plans to use the character. Sakurai and presumably a majority of the Smash fanbase want Geno. Its free money. Not only, is it free money BUT THEY KNOW its free money because they already let Sakurai use Geno as a basis for the Mii Costume DLC.
But all the sudden they don't want Geno in Smash? No way. If Geno isn't in then he's probably coming for DLC. Sakurai wants him and at least, AT LEAST, the vocal minority want Geno in Smash. If Geno doesn't make it in by the time that Smash Ultimate's DLC concludes........I'll be blown away.
Companies out here being offered free money and they look at it and say "meh."
The thing is, they still have to go through negotiations and work out a favorable deal.
And if anything Geno being a character they haven't used in over a decade, hurts his chances more. As, he wouldn't be promoting anything they have out and doesn't have a large enough fanbase, like other properties, to even warrant his inclusion.
It becomes a question if the character is even worthwhile economically speaking, and if they'll make any returns on him to justify the costs for licensing him.
This goes both ways for Nintendo and SE.
Also, in no way does the
majority of the Smash fanbase want him.
Not to discredit the character, but he's literally a character just from
one spin off that underpreformed in Nintendo's eyes. Not to mention some territories don't even know the game he's from, such as Europe.
He's extremely obscure.
A good chunk of the speculative community want him, sure. However, compare how small that is to the proportion of actual players and people that seek out the franchise.
That's a small minority in comparison.
He's not a popular character, as he's in only ever discussed in the
speculative realm of Smash, not Nintendo or even Mario characters.
But as I, and many others have said, it could literally come down to SE saying no as they have to come to a favorable deal.
It's not impossible, really.