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curl-6 said:
TheMisterManGuy said:

When has Nintendo ever done what makes surface level sense? Sure compared to Mario Kart, ARMS wasn't an amazing seller, and any normal publisher would've gutted the team afterward. But this is Nintendo we're talking about, they don't just measure success by raw profits, they also measure it by player enjoyment. ARMS made a profit, and players enjoyed it. Nintendo still regularly promotes the game, which should tell you they consider it a success if a modest one, and if Yabuki wants to make a sequel, he'll make a sequel, and Nintendo will let him. 

Nintendo does make nonsensical choices sometimes and I'm not ruling out them doing so here, but from a logical point of view, imagine you're a first party publisher with a limited amount of manpower. Do you commit one of your flagship teams to a sequel to a game that sold around 3m lifetime and fizzled out within a year, or a much bigger project with vastly more potential?

Nintendo has 11 in-house teams that work on multiple games at once. It's not like they can only choose one game at a time, so they can both grow the ARMS IP, as well as prepare the next Mario Kart entry as well.  So to answer your question, Why not both?