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This new Killer Instinct went for what's popular now art wise, instead of looking for it's own art direction. All that horsepower under the hood, just to look llike a step up from five year old SF is a missed opportunity.
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I'm not sure what popular art-style you believe KI to be imitating...elaborate?
It looks nothing like SFIV/Marvel to me and the comparison is sort of unfair. Capcom's games use NPR/cel-shading to pretty up what would otherwise be dull, low-detail character models. Seriously, jump into a SSFIV game right now and take a look at a character up close. Especially things like hair and facial features...ugh.
From a technical standpoint, Killer Instinct is closer to Injustice and MK but it still has the flashy, over-the-top style that made the originals awesome. Also, if you compare KI with those two games, it really does look like a generational graphics leap.
Could Killer Instinct look better? Definitely, but it's a launch game from a green dev and I'm glad that they're focusing on gameplay and balance instead. You know, the things that actually matter in a fighting game... (^o^)