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They already said they wouldn’t adding more Pokemon to Sword and Shield via updates but the statement about future games having a slimmed down Pokédex is unfortunate news.
The creation of high quality models for every Pokemon could easily be out-sourced and a catalog of assets created. Hell renegotiate with Niantic and have them create the assets that both Go and Pokemon.Next could use. It’ll be a real shame if the only game that supports all Pokemon is Pokemon Go.