The original plan to kill off Daniel LaRusso (Ralph Macchio) at the end of The Karate Kid Part III would have completely upended the franchise and made its TV continuation, Cobra Kai, impossible. The first three Karate Kid movies were directed by the late John G. Avildsen, written by Robert Mark Kamen, and starred Macchio as LaRusso and Noriyuki "Pat" Morita as his wise mentor, Mr. Miyagi. Today, Macchio is executive producer and stars in Cobra Kai along with his co-star from 1984's The Karate Kid, William Zabka, who plays Johnny Lawrence.
Released in 1989, The Karate Kid Part III was a darker tale than its predecessors that's universally regarded as the worst of the films about Daniel. The story involved LaRusso breaking away from Mr. Miyagi as a result of falling into a trap concocted by Cobra Kai's founders John Kreese (Martin Kove) and Terry Silver (Thomas Ian Griffith). Daniel even briefly joined Cobra Kai until Kreese and Silver revealed it was all a setup to make him face their handpicked karate hitman, Mike Barnes (Sean Kanan), at the All Valley Karate Tournament. However, Mr. Miyagi saved Daniel-san once more and trained him to defeat Barnes and his Cobra Kai cohorts. After that, the franchise attempted a failed 1994 reboot, The Next Karate Kid, and Macchio's time with The Karate Kid ended for almost 30 years — until Cobra Kai.
In a 2014 interview with Mandatory, John G. Avildsen spoke about his intention to kill Daniel LaRusso in The Karate Kid Part III: "I thought that Ralph [Macchio]’s character should die at the end of the third one. He gets in a fight defending Mr. Miyagi’s honor and he dies in the fight. Miyagi feels so devastated that he says, “I taught him too well.” Obviously, that would have been a radical ending that would have concluded the Karate Kid trilogy on a tragic and somber note. While The Karate Kid sequels (and now Cobra Kai) increased the level of violence in the franchise, Daniel dying at the end wouldn't have been in the best interest of the character, the fans, or the franchise. Thankfully, Avildsen's hopes for LaRusso's death didn't move forward, although he's right in bemoaning that The Karate Kid Part III ended up just rehashing the original film but without the magic that made The Karate Kid an enduring classic of 1980s cinema.
If Daniel had died at the end of The Karate Kid Part III, that would have meant that there would be no Cobra Kai. The Next Karate Kid likely still would have been made, but it still would have tanked critically and at the box office, and that would have been the end of The Karate Kid franchise completely. Although, it's also possible that Cobra Kai's producers, who are diehard fans of all three films, might still have created Cobra Kai anyway; they could have simply ignored Daniel's death in The Karate Kid Part III and retconned him back to life to continue the story with Johnny in the present day. But, of course, it's far better that Daniel wasn't killed off regardless.
Ralph Macchio has also said that The Karate Kid Part III is the only film in his trilogy he dislikes. Macchio agreed that the third movie just recycled the beats and story of the original, except for Daniel going dark and joining Cobra Kai, which he felt was the only new and interesting Part III brought to LaRusso's story. Still, it would have made no sense for Daniel to die at the end of The Karate Kid Part III and turn an inspirational trilogy about friendship and self-betterment into a tragedy. Despite Avildsen's belief that audiences "want an experience... They want to be moved," killing Daniel LaRusso was never the right strategy to accomplish that. Most importantly, Daniel's death would have reduced The Karate Kid saga into a strange footnote in movie history instead of the basis for the wildly successful Cobra Kai, which has created a new generation of fans while simultaneously satisfying people who grew up with The Karate Kid movies.