And this is more or less a budget release already at $40 for physical or digital so they aren't wanting to take on too much risk. They also likely don't want to opt for the larger cartridge size because that would be additional expense that they may have to eat.

For Activision's side they are releasing a game that has been on the market for over a year and they aren't sure what the sales numbers will be.

Should be a consideration at least for what games should be physical Splatoon/Smash) I less care about, since if you transfer the game others can still download the needed content for free, and you could always play the base game from the cart. Or say for collections, when part of the collection is lost / non-transferrable with the cartridge since it's a limited-one-code-use download. But a large portion of the point is lost.

If you always require a (large) download to play it, or maybe even any download at all to at least be able to play it from the cartridge alone, then in some ways why go physical? Sure there's a bit of a collector's aspect to it. I understand the sizes may be small and catridges are expensive, but the point of having it physical in large part is to be able to share the game with others and have access to it (even if eshop goes down in future due to new systems). I think companies are missing the point of the appeal of having games on physical cartridge.

Nintendo switch spyro game