Third-parties aren't all that different from first-parties, even though people like to pretend they are.
Once you step away from the, "I can't believe 'X' franchise is represented in Smash!" factor, third-parties are subject to the same scrutiny and opinions as first-parties. People have to ask themselves, "Is this a character I really wanted?" "Do I know the character, and if not, does that bother me?" "Is the character unique, or did they get added for the sake of it?"
While I'll admit that the number of Nintendo characters who could bring a lot of excitement is dwindling, I'm not convinced being a third-party is all it takes to shock the crowd and stir up hype. It's circumstantial, and it differs from person to person. There are many scenarios where getting Pokémon #11 would be more exciting than niche third-party character most people outside of Japan have never heard of.
Just depends on what was/is being discussed behind closed doors. A lot of people wouldn't have guessed Corrin would get in after Robin, Lucina, and Roy's return, but Sakurai and his team saw potential, regardless of the fact that it already received a substantial amount of content.
That’s all well and good, but how does a Nintendo property, with fans that
likely would have already purchased the game and console draw in new customers?
There’s more to gain from adding content that isn’t tangentially connected to Smash already. Sure, a Gen 8 Pokémon is “new”, but it’s a Pokémon. Gameplay potential is absolutely an aspect that’s important, but considering there are 3rd party choices providing similar amount of potential,
and bring in entirely new series, there’s more to gain with a 3rd party there.
I never said niche, by the way. If you’re talking Pokémon #11 vs. Resident Evil, Tekken, Tales, Monster Hunter, Ace Attorney, or Devil May Cry, it’s a clear decision if you ask me.
Pokémon is one of my favorites by the way.
There’s also the marketing aspect. Let’s say the last two picks are from first-party series, and that finishes up Smash Ultimate. Rather than being able to say the crossover has reached 37 different series, they can only brag about it being 35. Sure, it’s only two series difference, but I think the point stands that entirely new series, mostly being 3rd party (as most series from Nintendo that would be completely new are already represented in some fashion) expand the crossover element in ways first parties don’t.
Basically, 3rd parties reach a wider audience, bring in more content that is
unique from series already in Smash by virtue of not being Nintendo-owned in the first place, and are something that Ultimate specifically has ground to gain with.
If this crossover never happens again, then the 37 unique series will never be reached. A Pokémon of Fire Emblem character makes more sense as a base roster add for the next Smash, not the crossover to end all crossover game, in my humble opinion.
(though I suppose, to be fair, new series appealing to more new fans isn’t my opinion. That’s pretty much a fact.)