Its not Overwatch or Splatoon in terms of success, but I think ARMS is not a failure. The comparisons should not take away from its success.
Over 2.1 million units (as of Sept. 2018) sold is nothing to sniff at, especially for a new IP. I know we expected a lot, considering its a new big IP for Nintendo and people were comparing it to Splatoon. However, as a fighting game with unique gameplay mechanics, its audience was not going to be as grand as some would have expected. Not to mention, it was eventually going to lose some of its momentum when Splatoon 2 released the month after ARMS.
Nevertheless, as I said before, over 2.1 million units is great, especially for a new fighting game. Let's not forget, Street Fighter V, with all its promotion and focus on the competitive scene, did not do well out the gate and it took Street Fighter V: Arcade Edition to help get the overall sales above 3.7 million units as of August 2019. Hell, Tekken 7, which has garnered praise, has sold about 4 million copies as of March 2019. These numbers do not really blow ARMS out of the water sales-wise.
I think ARMS will be remembered as a solid fighting game with unique mechanics and colorful characters. The Mario Kart team that developed the game (led by Kosuke Yabuki) are probably pleased with themselves for being able to develop something successful and unique beyond Mario Kart.