I can't think of any reason to suggest something be cancelled before anything is even known about it. I'd even rather see a noble failure than endless Internet speculation on what never was.
And if there's one thing Telltale has demonstrated consistently, it's that they work really hard to make sure their games "get" the licensed properties they work with. King's Quest may be a less natural fit than Monkey Island, but I'm sure all the stuff we're debating here is also being considered by the Telltale team.
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