Rare studio manager Mark Betteridge has told Eurogamer that the veteran Britsoft developer is thinking about making a new version of Killer Instinct - but that it would require a "revolution" to make it worthwhile.
Betteridge, who was lead engineer on the original instalment of the 2D fighter, admitted the franchise was a candidate for revival, following the rebirth of Banjo-Kazooie in Nuts & Bolts, which released earlier this month on Xbox 360.
"Killer Instinct is an IP that is fondly remembered and we may do something with it, but it's a tricky market to be like the old Killer Instinct," he revealed.
"At the time there was Street Fighter and Mortal Kombat and we were thinking, 'how do we make our own area here?' and it came from the combo system. The market after that became more and more specialised. And all you do then is make your user-base smaller and smaller and it disappears [to the point where] it's not really feasible anymore."
However, Betteridge insisted there were still great opportunities in the one-on-one fighting genre to be seized with the right innovation.
"Once a market gets like that then it needs a revolution to bring something new to it and to kick-start a new growth," he said. "It will stagnate for a while and then it needs a real significant change of direction potentially.
"It is a law of diminishing returns to recycle the same game. That's why we didn't want to do that with Banjo just to build a Banjo game that was hi-def. We wanted to do a game that not only provided a different gameplay experience that we couldn't do before, but we wanted to build something that we can then build on to do other titles."
Rare is notorious for teasing fans about forthcoming projects, and recently sparked fresh rumours of Killer Instinct 3 with the release of themed cards for Viva Piñata: Trouble in Paradise.
Killer Instinct first hit arcades in the mid-'90s, followed by versions for SNES and GBA, with a sequel appearing as a coin-op and on N64. It was famed notably for its stunning visuals and massive combos.
Rare celebrated its 25th anniversary earlier this year, but despite the strength of its back catalogue, creating IP is "primarily our goal", according to production manager Lee Schuneman.
He added: "We want to be forward-thinking as much as we can. Even though we've got a great heritage that gamers love and we love, we want our design team to be thinking for the next thing, what's the next great idea. We need to define our own space on this console and we're only going to do that by using new IP."
"The best way to have success is to build your own area," added Betteridge. "We don't want to chase a genre. We think the best genres are the ones that don't exist at the moment."