Killer Instinct became a major hit for Microsoft when it was released back in 2013. It was a fun game developed by Double Helix Games that had a clever free-to-play solution that actually enhanced the game online as you got access to all characters at a rotating schedule, so you always got to face different characters online.
Unfortunately, Iron Galaxy Studios Double Helix Games was sold to Amazon and Iron Galaxy Studios took over. They did an excellent job, but they seem to have moved away from fighting games since then. After couple of years, we haven't heard anything about Killer Instinct, even though the community is still alive.
During the weekend, two Xbox insiders (The Windows Central editor Jez Corden and Rand al Thor 19) claimed in their podcast Xbox Two, that Microsoft is in fact trying to make another Killer Instinct, but haven't found any developer who can do this. This makes sense as there are very few developers who can make good 2D fighting games nowadays.
This is of course only a rumour, but if Microsoft wants to make the game but hasn't even found a developer yet, we probably should not expect a new Killer Instinct until at the end of this generation.