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In a 2018 interview with Kotaru Hayashida, it was revealed that the Alex Kidd franchise was originally envisioned as an adaptation of the popular 1984 manga Dragon Ball. However, because Sega lost the license to the comic partway through development, they had to refocus the first game into an original IP. Among other changes, Goku was redesigned into a lookalike of his inspiration, Chinese literary character Sun Wukong, and his Nyoi-Bo staff attack was replaced with a simple punch.
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In an Sega.jp Meisaku interview with game's creator Kotaru Hayashida (aka Ossale Kohta), he was asked why did he wanted to use jan-ken-pon (rock–paper–scissors) in boss fights. And he responded:

"That was also one of our concepts to differentiate our game from Mario. It a very fanciful, absurd idea. There were various reactions, like “What the hell! Isn’t this supposed to be an action game?!” or “I lost the rock-paper-scissors match and its Game over!? This sucks.” Definitely, for people who are good at action games to lose everything and Game Over because of a rock paper scissors match… yeah, that sucks.

The staff at Sega shared these concerns, but I wanted to know how players would react to it, so I left it in."