The Question has already been answered.
and it's obvious. It wasn't made by Nintendo.
But that's not what this topic is about, This Topic is "WHY did Playstation All Stars Battle Royale Failed."
Just look at Playstation All Stars, the Before and After. It was pretty well hyped amongst some gamers, seeing the first few Teaser trailers, that strange tv add with random video game characters cheering for a random game player, or whatever. It was pretty good stuff. Then the game came along and it looked pretty incredible, You had Dante, A Big daddy, freakin' Sack boy all fighting with Kratos, Sly Cooper, Jak & Daxter, and Nathan Drake, it's was great! Had some really neat memorable characters from Sony's Roster from recent years, the Stages were nice, had some nods to other Sony games too, and the game wasn't a total clone of Smash Brothers even though the button placement was pretty much the same, except the game wasn't about knocking the other player off the stage rather than K.O.ing them with a Super that had about 3 stages and got stronger the longer you fought.
I thought the game was neat, about time Nintendo got some competition. Not to mention this game was also on the Vita and both versions were compatible with each other, meaning one person could be playing on a Vita and the other on a PS3. That's freakin' Nifty.
So again, "WHY did Playstation All Stars Battle Royal fail?"
and we're back to the answer. It wasn't made by Nintendo.
Look at this year's EVO, look at the E3 Invitational, Best Buy Lines for Smash Fest,....
You did not see this level of Hype for PASBR. Even though back then there were a vocal few who DID want Sony to make a Smash Bros. of their own. And they did, but ultimately they failed.
And the reason is because There is NOTHING in Sony's Library that could ever match to the levels of Nintendo's IPs. You can keep talking about how you played so many hours of Twisted Metal, You could keep saying that Jak & Daxter are such a better team than Mario and Luigi. You could say Uncharted is a way better Action Adventure than both Metroid and Zelda.
And you can be right. BUT Looking at the way Nintendo Handles their IPs, and keeps them relevant over the years and maintaining an Audience that does things way over and beyond what many would deem impossible or even impractical.
Just load up some of Little Big Planet's levels surely you'll find ONE if not TWO or maybe even THREE Nintendo Themed Levels anywhere on that world, You'll Game Developers like The Creator of God of War citing that they want to make a God of War "Zelda".
It's no wonder that Playstation All Stars Failed. Even though that game had an All Star Cast, from Sony's Beginnings to Today's time, Nothing they had could ever match Nintendo's Roster of Super Smash Bros.
And We said Nintendo was irrelevant. No wonder you want them to go 3rd Party.