Wonderful 101 Director Hideki Kamiya explained that the original concept stemmed from Platinum Games CEO and President Tatsuya Minami's order to "bring together world famous characters with Nintendo characters at its center, appearing all in one game." While working with the original idea, Kamiya wanted to find a way to "please everyone by letting them play the whole game as their favorite character."
As one would imagine, the involved licensing sunk the original concept. Nintendo President Iwata said that the game's "cover certainly [had] impact to make even me think twice, and I was the producer working hard to gather all the characters in the first Smash Bros.!" Nintendo Producer Hitoshi Yamagami reacted similarly, noting that "the moment I saw the cover, I winced ..."
Several months after Platinum Games' initial pitch, Nintendo's Licensing Department contacted Yamagami concerning a revamped build of the game without Nintendo's characters. Once Managing Director of Nintendo Shinya Takahashi showed him a demo of the new project, Yamagami "knew the moment [he] saw it that this was that idea from Platinum Games."