Same with Bakugan, Monsuno, Yu-Gi-Oh, Card Fight!! Vanguard, Future Card Buddyfight, Shadowverse, etc.
I don't really see what the problem is. If Nintendo was just a little less out of touch with what their fan base wanted, they could be raking in (even more) cash. But instead of doing that, they waste their resources getting butthurt over the silliest things, like people posting game play videos of humorous single player ROM hacks of games no longer being sold (they have successfully removed more YouTube videos like this than I count by sending DMCA take downs -- its ridiculous). More focus on innovating and less focus on litigation would do them (and their fan base) well.
It's not Palworld's fault that Nintendo et al choose to release horribly unoptimized, not fun Pokemon games (like Pokemon Scarlet and Violet). I think it's great that a competitor in the monster-capture game genre is providing an actually fun game, because despite the enormity of the Pokemon fan base and the massive financial incentive to deliver a compelling game to them, clearly Nintendo either can't or simply won't do it.