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I think its never happened because of the fatalities. I'm sure Ed Boon wanted to keep the MK-esque feel of the game and Capcom was like all no as its not part of their game.

However, a good mashup of the two's distinct platforms would be a good game and probably sell a ton considering all the fanboy banter back in the day about which is better. Odd since we all know MK was by far better than SF.