On March 16, 2010, Kenn Lobb announced that they are not working on Killer Instinct 3, but that they may bring Killer Instinct back someday
On July 25, 2010, Kenn Lobb said Rare wants to make Killer Instinct 3. "Ahhhh, Killer Instinct, another one of my babies," mused Lobb. "I obviously have personal feelings about Killer Instinct, but I do think it’s got a place and again it makes that sort of sense... "Let’s bring something that people loved in the past and see how it does on the Live Arcade." Again, we haven’t started anything yet, so don’t freak out, but Killer Instinct is something that we’re constantly talking about."
When pressed on whether the franchise would ever get a true current generation sequel, Lobb reveals that they actually started on the sequel after Killer Instinct 2
"Actually after KI2, we started KI3 so there was some early work done on it," Lobb revealed. "Someday, maybe. I think in some ways – again, we don’t have any plans – but if we were going to do a KI3, we’d probably start with KI1 on XBLA, you know to a.) see if everyone is still interested in the IP, but also as a reminder of what it was like."
"Street Fighter is a great example of that, right?" he continued, "They obviously did
Street Fighter 4 last year very successfully, but right before it,
Street Fighter HD. It sold very well. I’ve always been a huge fighting game fan so I never really “got out” of Street Fighter, but when Street Fighter HD came out, I played the crap out of it. I was excited to get Street Fighter 4. I think the same thing could work."