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I can see it being big because I got that same impression of pure fun from ARMS that I got from Splatoon when I saw gameplay for it. It should be easy to advertise too because the gameplay by itself looks fun at first glance and has depth, it seems easy to get into, the motion controls can lure in casuals, normal controls can lure in core gamers and the portability of the Switch can boost word-of-mouth advertisement. Right now, it seems like the only questions are if Nintendo will advertise it aggressively and  the amount of content that's going to be in the game. If the game ends up having 12 or so unique characters, more loadout options, a single player campaign and good online options along with a good advertising push similar to  Splatoon, I can see it taking off and becoming a new big IP for Nintendo. In fact, the only thing I don't like about the game so far is the name: ARMS. I mean, couldn't they come up with a name with more punch than that?

If the game gets big, it will probably gain a competitive scene by default.