A couple of days ago during the most recent Killer Instinct stream from PlayXBLA, I asked the developers a question about the story for the upcoming game. Specifically, I asked if it would be following the events of Killer Instinct and Killer Instinct 2/Gold. If you were hoping to find out what happened after the defeat Gargos, then I’m afraid that will have to be left to your imagination, as the story will be a reboot.
The main reason for not continuing after KI 2 is because they wouldn’t exactly know where to begin. There were so many different endings to go by that would be difficult to decided which exactly would be the true ending. So instead. Double Helix said they will be taking specific story elements of the characters that they liked and will be utilizing those for their new rebooted story. This, of course, is fairly obvious. Chief Thunder is still searching for his brother Eagle, Glacius still crash landed on Earth, Sabrewulf is still attempting to cure himself of Lycanthropy and so forth.
I was honestly hoping for a follow-up, but I think Double Helix made the right decision here. With the way the game is being developed and so many years having passed by, a reboot is likely what the story needs. Plus, they are doing a huge fan service by ensuring that the old characters are maintaining their popular and well-known backgrounds. That, to me, was always my one big concern.