While it was a crappy decision in the first place, I did notice something when I checked the EVO schedule. Nearly every other game publisher/developer with a game in EVO is sponsoring it (Capcom, WB, even the Divekick guys). Nintendo isn't. True, most of those companies likely got involved to pimp their fighting games (WB!), but if you were a company on the outside looking in, would you be that happy if all these other companies got exposure based on your product?
Cooler heads prevailed, fortunately, and it's being streamed, but from strictly a business standpoint, it's not completely dumb. From every other standpoint? Yes, it is dumb, especially from the PR standpoint people are harping on.