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IGN - Nintendo explains why they had muppets made for their Digital Event
Coming from Reggie Fils-Aime...
"Making people smile is in our DNA. We are a company that’s all about entertainment. One of the things Miyamoto shared was that in his youth, he used to make puppets. So that led to a series of brainstorms and it lead to our little collaboration with Henson studios and creating the Nintendo muppets. It was a very fun collaboration."
[Link]