Honestly, no.
I’m not really adding anything new to the conversation, but the MK/INJ style, which I’m sure anyone would agree would be a major influence given it’s NRS’s thing, doesn’t really fit KI. NRS games tend to have stiff animations that emphasize each individual impact, which mirrors the kung-fu movie influence that is the basis of the NRS style. I feel like by handing KI off to NRS, they would feel like it’s because MS wanted their style infused into KI, and not simply to make a sequel. It’d be kinda like handing off a Lord of the Rings sequel to Michael Bay expecting it to come out in the same tone and style the other LOTR movies had.
Instead you’d get explosions, gratuitous skimpy female elf scenes, middle-earth patriotism everywhere, and culturally insensitive comic relief characters. OH, and based off of content from Transformers 5, a drunk wizard.
Capcom isn’t ignoring the community. They couldn’t add X-men because they didn’t have the license to do so. Now that Disney is buying Fox though, this could change.
DH and IG collaboration would be my dream for KI sequel.
What if Square-Enix made a KI fighting game? 
Jago’s hair would get spikier! 
Does the new Dissidia FF NT count? I really enjoyed Ehrgeiz on the PSone. Wish they made a sequel to that. If they did though, my guess is that it’d be announced and then arrive ten years later lol. 
Well Dissidia isn’t a KI fighting game.
However, it does show that Square can make a fun fighting game, even if it is a bit overly RPG for most fighting game fans.
All this said though…
… I’d still want a Mortal Kombat VS Killer Instinct crossover game!
It’s the only VS game I have ever wanted, tbh. But again, will most likely never happen because Microsoft cares so much about exclusivity.
OH! Derp. I misread. I thought you just said “what if Square Enix made a fighting game.” Hahaha, sorry.
Did you ever play Ehrgeiz? I remember that being relatively fun, though I haven’t played it in years. I have in PSone. I should give it another shot sometime.
Man, if Square Enix made a KI game? I’d have to think tons of outfits per character, a bit more eastern inspired character designs, and yeah… Still sticking to the ten year dev cycle 
Well I’m going into this question with the assumption that NRS would be given the gameplay mechanics of the current KI and would be tasked with improving upon them in a meaningful fashion. With that said I do think they could actually make something out of it, the real issue is if any new stuff they add to the formula would actually work in terms of making the game still feel fun while also retaining it’s sense of gameplay balance, which is where the issues lies in my opinion. NRS does have a habit of trying new mechanics that don’t always work in their favor (for example MKX variations being a nightmare to balance due to how much had to be balanced to begin with) so I would be concerned if any new system they added to a KI sequel would potentially ruin the balance to any significant degree.
There is also the issue of animation quality and consistency but the last set of posts talked about that enough, so I’ll just say that it does feel weird that NRS is sticking with the “rule of cool” ideology of character animation despite making the overall art direction of their games more realistic with MKX and IJ2; it does clash in the eyes of many people so one would think they would take notice and try to filter the animations to remove any clunkiness (apart from other factors of course). Of course this isn’t a practice exclusive to NRS (someone in this topic mentioned From Software having a similar practice for example) but if they were to make a KI game they would to change that behavior for the sake of the standard set by this KI game.
I don’t think it would be that severe, in MKX the guest characters didn’t talk and yet intros still worked well (the characters that talk still talk, and the ones that don’t just have a standard intro). In the case of Riptor vs. Glacius they would just act like Alien vs. Predator where no one talks but you still understand they are going to fight each other. And in the case of Thunder, Eagle, and other other non-english speaking characters they could still have them speak their native languages but with optional subtitles like they do in this game (also it would finally give NRS an excuse to put subtitles in their intro dialogs, easily one of the most annoying aspects of their intros IMO). I’m not saying it would be perfect but I don’t see them having Thunder suddenly speaking English either, not if they were serious about being faithful to KI.
To be fair, they all speak English in Shadow Lords dialogue.
I can respect NRS for trying to learn from their past games. IJ2 has made several strides towards more content, better netcode, and fewer patches that just shake up the whole game for no real reason. It’s clear they are trying to learn from past mistakes, which is something I can appreciate in a space where few companies seem interested in doing that.
But there’s no denying that NRS games play a “certain way”. All modern NRS games have rules that are vastly different from SF games; they handle frame data and jumping attacks differently than any other 2D fighter, their animations range from worst-in-the-industry to I-guess-that’s-okayish, their offense is largely string-based which promotes an entirely unique feel for hit confirming and playing neutral, most of their combos are based on juggling, etc. None of these things (except the animations) are wrong, per se, they just aren’t what I would want in a KI game, which for me is a high-octane adaptation of traditional SF rules which I enjoy.
Also, NRS has its hands full with its own franchises, so I don’t see why they’d want to work on a platform-exclusive title that is owned by another company.
And of course, all this is predicated on the idea that MS is interested in making another fighting game, which I find the most difficult assumption to believe in this whole discussion. I think MS wants out of the space and aren’t looking to make more fighting games.
Quoted for truth. But it’s not just the internet, it’s everywhere.
Also true. You can knock NRS for whatever you want, but NO ONE can claim they are busy worrying about what anyone else is doing. They are busy doing their thing.
As far as the original question, I think it’s ultra unrealistic to think NRS wants to be working on a third series. They have a stream of work that lets them release a multimillion selling game every two years and I don’t know why they would throw a wrench into that to make a game in commissions for Microsoft - single platform exclusive and maybe on PC (which is not their forte).
As far as “could they do it?” Of course they could do it. I’m sure they could make a FPS or an RPG too. But I don’t think NRS lines up especially well with KI. Of course, Double Helix had zero history making fighting games and they knocked KI out of the park.
I EDIT: wouldn’t (this read “would”, which was a typo and completely changed the meaning of the statement. Sorry folks) want to see KI become an NRS game - meaning become more like MK or Injustice. But I’m sure NRS could make a different sort of game. Again, I’m wondering why they would.
Edit:
I didn’t see this but I have to agree. I wish I could find a shred of evidence with which to argue but I can’t. And even worse, I can’t blame them. The FGC has done nothing but criticize them for the game and I doubt it did better than break even financially.
I read one review of Injustice 2 tha Described the Input Buffer as both “Too Strict and Too Lenient at the same time.” And have to agree the way the system was coded cause players to do some unintentional things… which shouldn’t be happening fora game with seemingly simple input motions.
Microsoft has said ki was a success. And they have been pushing dragonball pretty well. I think they’ll eventually make another game. Though I have no clue when.
MS has become expert at using every metric other than income to define “success.” For the record, I think KI is a success. It’s an amazing game, it has filled in what has turned out to be a rather weak first party portfolio on the Xbox One. It’s definitely generated a lot of buzz.
But based on the evidence in front of me, I don’t think the game has made money.
I would love to be wrong. And I would be thrilled if MS was willing to dive back in for more KI. I would pre-order now for a 2021 launch date. But I just don’t see it happening.
I would be incredibly disappointed. Netherrealm studios games all have that robotic look and feel to the gameplay. The story modes are great but that’s about it in my opinion.
Speaking of Dissidia, the game’s Bravery System works almost identically to Potential Damage. In both games, you build it up and cash it out with an HP Move/Ender. I’m sure Square Enix/Team Ninja could come up with some cool ideas if they wanted to. They know how to handle core material well.
I suck at NR-fighters; I learned my lesson with Injustice 2. Art is great but they’re not great at balancing rosters and gameplay seems sluggish and not flashy enough.
I agree that it can be sluggish at times, but I disagree with flashy. have you seen the Flash, Enchantress or Raiden?
That’s something I’d love to see and play!
I’ve been wanting that Cross over for years. 2 of my favourite sagas together! 
Also,I want Vertigo from Primal Rage as a guest character xD