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Medisti said:

Sakurai seemed to imply the DLC characters were chosen at the start of development, since Rex "came out too late" to make the roster and the Mii costume is his way of adding Xenoblade 2 content in. That's probably also why ARMS got Mii costumes and an Assist Trophy. So, newer characters like Fire Emblem Three Houses are probably out. The only thing I'm curious about is if Spirits disconfirms a character or not (playable fighters have Spirits of some of their different costumes, so who knows).

1. Elma (there's a suspicious lack of Xenoblade Chronicles X music while 1 and 2 have tracks)
2. Geno (Sakurai has said he wanted him in Brawl, I believe. He might try again)
3. Shantae (Unlikely. WayForward was silent about her being in Smash, clearly under NDA since she's a Spirit. Now they're answering questions about her being a Spirit but silent about any questions about her being possible DLC. Probably nothing, but I was eying them before when they were uncharacteristically silent and it turned out to be a sign)
4. Steve or Banjo-Kazooie (I'm cheating here, but Phil Spencer has suggested he'd be okay working with Nintendo on this, but it's hard to say which it would be. Minecraft is one of the best-selling games ever and is huge in Japan and on Switch, but Banjo-Kazooie have history)
5. Bandana Waddle Dee (Technically created by Sakurai since he was in Kirby Super Star, Kirby hasn't gotten a new rep since Brawl)

Watch me be 0 for 5 when it's all said and done. XD

The music tracks are exactly why  I think Elma is dlc as well. I made a bet about Bandana Dee not being in the game, so  I hope that prediction is wrong lol.