Why does a fighting game always have a really lousy character?
I know some people use or be familiar with these characters just because they are really hard to use. Therefore, if a player use Dan to win a top tier character, he probably will get more satisfaction than just using a top tier character to win the game. In addition, if the player loses a game by using a real lousy character, he probably won't feel very frustrated. Frankly speaking, when I saw that Bass is in the bottom tier, I was so surprised, because I quite like to use this guy. Although he is very slow, hard to use special moves, he is powerful. When I used him to win a game, I was always happier than using Gen Fu (who is a known strong character) to win. However, people like to use lousy character are very few. Most people still like to use characters in good or top tiers. So, what is the greater value does those characters have to let them keep in game series?
If we recall our memory, we probably would notice that Dan was not in the list of Street Fighter 2 series, because the story setting of Street Fighter 2 was very serious: Only the best fighters in the world can join the tournament. So, under this setting, every character in Street Fighter 2 is almost equally strong (Some people may disagree.) However, the story of game series cannot use the same setting as previous. Therefore, creators need to think more side stories happened around those main characters. That's it! Some minor characters will be created to manifest the importance of main characters, and make the story behind main characters richer than previous version. Dan's story is extending of the story between Ryu and Sagat. Basically, his roll is a clown, and he always uses funny moves in the game. So dose Kuma / Panda in Tekken, and Bass in Dead or Alive. Their stories are cute and humorous. Just like all stories in great cartoons or hit movies, there is always a clown to make people laugh, manifest the greatness of main characters and rich stories.
I think every player would notice that those lousy characters are designed to be funny. If we look Bass who is a pro-wrestler, all his moves and wearing are just cannot be called "handsome". However, it is fun to watch this weird guy fighting. Kuma and Panda are excellent weirdo in Tekken, because they are bears. To fight with a bear? What a funny idea! In fact, Tekken series always keeps this sense of humor, because they want players also can enjoy another atmosphere after bunch of serious fighting. So, Kuma and Panda are always as bonus characters. And Dan, must be the character that Capcom used to laugh at SNK, because he is the lousy version of Ryo (Art of Fighting series). Most senior Capcom players would like this character just because designers always can make fun of him. These lousy characters do have a great value which is to maintain of the humor of those games.
There is no really balance fighting games in the world. However, there is really something more important than balance those games: making it challenging, telling more stories to make people feel sympathy about characters, and making people laughing.