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The_Liquid_Laser said:

I already said in a previous post that I am good with Nintendo making Labo, because it is so unique that it can attract new customers to the system.  Labo fits the description of creative and niche.  Arms is really just a fighting game.  I am ok that they made it once, but it shouldn't get a sequel.  Now that they know it won't sell a ton, then it shouldn't get a sequel.

Basically, not every game needs to be a "safebet", but every game needs to attempt to be a system seller.  A niche game that brings in a new type of customer can be a (small) system seller.  Obviously the top selling titles are system sellers.  These are the types of games that Nintendo needs to make.  A game that sells 1-2m and is in the same genre of a bigger game, like ARMS, should not get a sequel.  It is a waste of resources, even if it technically makes a profit.  Too much opportunity cost is lost.

ARMS plays nothing like Smash though. The audience for both games couldn't be any more different. Nintendo's more than likely going to make a sequel to it because it sold well. It actually was more successful than they anticipated, that they added a few more things before wrapping up. Yabuki even said he wanted to make a sequel.