According to an Iwata Asks interview with Fire Emblem developer, Intelligent Systems, Fire Emblem: Awakening was to be the last installment in the series.
Producer, Hitoshi Yamagami, said in the interview that Nintendo sales had informed Intelligent Systems that “The Emblem series isn’t making the numbers, so this is going to be the last one.” This could have been the exact saving grace that Fire Emblem needed.
Going forward with the knowledge that Awakening would be the final Fire Emblem game, Intelligent Systems told Iwata they put in every idea they ever wanted in a Fire Emblem game so they wouldn’t “have any regrets.” The culmination of these ideas sold surprisingly well; Awakening being the best selling Fire Emblem iteration outside Japan.
Shortly after, Nintendo came back asking “When’s the next one coming out?” which took the team for quite a shock. Being that they had put everything they had into Awakening the pool of ideas had run dry. It was Yamagami that reached back into the days of Fire Emblem on the NES (Nintendo Entertainment System) and decided it was time to revisit an idea that was not possible during that era.
During the first Fire Emblem, players were forced to choose between two characters to have as allies, Arran and Samson, but regardless of the choice the story didn’t change. This was due to the hardware of the time lacking the memory to support branching story paths. This inspired the multiple Fire Emblem: Fates games, which will allow players to choose from different storylines they want to follow.