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Robert_Downey_Jr. said:
Soundwave said:

It's the OLYMPICS. "Joe Average" watching in Brazil, Germany, Australia, South Africa, isn't going to know some random game character ... it had to be Mario. 

Mario was not representing gaming either, he was representing Japan, which is a far bigger deal. 

a big group of gaming characters, a big group of historical characters, and a big group of film makers would be great.  Represent the biggest Japan things

Mario does represent Japan and is one of the biggest icons not just in gaming and in Japan, but in pop culture around the world as well. People who may not have played games know some of the images and sounds from Mario because Mario was, and still is, everywhere. If you wanna include gaming characters, you can have Pikachu, Jibanyan (debatedly due to recent success), Mega Man, Sonic, Donkey Kong, and Pac-Man join in. But for the most part, Mario is an enduring universal icon from Japan. Why do you think people within the audience reacted positively the way they did or why news channels were focusing on the Mario section of the hand-off? He's recognizable by pretty much anyone, especially those into gaming and pop culture.