Saito, all you've just said is he mostly sucks and would need to be changed heavily to make his few good traits stand out as worthwhile.
That much is obvious, however, the thing is most people look at all that work and ask themselves, why even bother when there are so many characters to choose from?
How would changing an existing character to be balanced be more difficult than creating a new character completely from scratch, making move animations of a professional level, and balancing them as well?
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I was in the middle of constructing a post but since I don't want to double post I'll post it here.
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I don't think it's possible for Pichu to be interesting to anyone at all unless they think a little outside the box.
The main reasons people don't want him in P:M
This is true, but that's due to a multitude of things that hinder the character. Even still, just because he is not as good as the other character doesn't mean he doesn't add to the table. Look at Roy and Marth in Melee to reinforce that statement.
He is a joke character, he was meant to be bad.
Jigglypuff was considered by Sakurai to be the joke character of the first game and she ended up not even being nearly as bad. Pichu just happened to actually be bad enough to where he was the lowest tier'd character in Melee.
Now remember that this is Project M, a game modification that has rebalanced a whole cast of characters to be competitively viable. Do you think this would be impossible for them to do merely because this character was the joke character?
That joke character had the advantage of having the shortest landing lag of any character. Think of how something like that would be on a character that is competitively viable. It's scary, powerful, and just plain out sounds amazing.
That's because he wasn't "good" and no one prominent played AND won enough to give this character that level of popularity. Being a lower evolved form of Pikachu doesn't allow him to have a good fanbase as opposed to a different character like Roy/Ganondorf.
The few people that do like Pichu know all about what the character can actually do. These players don't just say they want Pichu in just because he was "cute" or "neat" but because they know how this character actually played. They see potential in it and hope that the PMBR will see it too and make it a reality.
We have enough Pokemon representatives
We do have a lot of Pokemon. That is very true, but why does that have to be a main argument for not wanting Pichu back?
A completely different character has to be stifled by the fact that there are many other characters from a game that has seven hundred and twenty one unique creatures. It just Irks me.
That's right guys, potential doesn't matter at all. Only how many characters X series has.
It's a waste of a character slot!
Calm down Sherlock, it's only a waste of a character slot if they don't add anything to the roster.
Pichu would deliver.
I don't know how they will make it work.
I don't know about you, but that is what gets me interested in a character.
How WILL they make him work?
That's a question that I want to see in action rather than in theory.