You gave off the notion that someone wouldn't bother checking out Killer Instinct because they'd already have access to one KI character. I think if anything that would make a person more open to checking out KI if they thought the guest character was badass.
Ah, I'm sorry I worded it like that, my mistake as I've argued in the past that characters in a game can be advertising for your comic or game or what have you. My problem is that MKX may take focus away from KI so why would MS want to advertise another FG by including a character from their fighting game? If it was another genre then it'd be fine but you're now advertising a competitor, I don't know if MS or WB would want that.
Who says they won't? Again it's not all business even in corporate settings top managers do approve stuff their employees want to do.
Sure, if we are talking about Master Chief, but we are talking about KI characters here.
It is all business, everything they do must make "business" sense. MS may not want to advertise another game in the same genre as there's by putting one of their characters in it. WB may feel the same about not advertising KI in their fighting game.
KI characters may not be exempt, have you seen the fatalities in MKX? I'm not sure if MS would want Jago's eyes popping out before his head explodes. Who knows though?