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It's not going to be "based on the games" we already had that with Origins. The reason Ash needs companions is because characters need someone to interact with, this is not something necessary in a game but crucial in a show or movie.
I doubt this is an Alternate Universe, the fact that it has different characters and the legendary of SM means its likely a dream or something along those lines most likely caused by "mischief" of the legendary. They want to squeeze nostalgia as well as promote the Ultra games at the same time.
I was super hyped for this movie as I wanted a movie version of the first episode, so yeah we didn't need misty outside a cameo as she didn't really join Ash until the second episode and Brock even later and this movie didn't seem like it would deal with Ash getting badges but more about Ho-Oh and basically expanding the origin.
But yeah now we likely have this movie that is only partially based on the first episode but not really. So now the nostalgia card is lost on us older fans and the younger fans will still complain about only pandering to use. It's a lose lose for them.
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