The following info comes from Evo co-founder Joey "Mr Wizard" Cuellar.

"They were not only trying to shut down the stream, they were trying to shut down the event; the Smash portion of the event. It's their IP, they can do whatever they want, and they didn't present us with any options to keep it open, they were just 'Hey, we want to shut you down.' And we kinda wigwammed our way through it and they were fine with just shutting down the streaming portion of the event. And that was that. And we were not going to press any further. Its their IP, we respect Nintendo's decision to protect their IP, and we were going to comply with the legal department completely. So at that point it was over.

...it had to have been the bad PR they were getting (that changed their decision), in conjunction with the power of the internet and seeing their Smash fans saying 'We want to see this event? Can you please let us see it?'"

Man, I just do not get Nintendo sometimes. Yes, it's their right to make this request, but why was it so important to them? If it was that important, why did they reverse the decision just hours later?