Steve Allison of Telltale confirmed that they are no longer working on the game and have no information if Activision future plans regarding the license at this point. Steve explains that Telltale looked into third-party solutions for development last year, but eventually decided against outsourcing and to cancel the project all together.
It turns out, Paul Trowe of Replay Games tried to talk to Telltale about retrieving the rights for remakes similar to their upcoming Leisure Suit Larry release, but Activision answered that they had plans themselves for the franchise, what these plans may be are unknown for the time being.
The last official King’s Quest game was the widely panned King’s Quest (VIII): Mask of Eternity, a action-adventure that tried to turn the point-and-click series into a RPG. Since then we’ve had plenty of fan-produced remakes as well as a fan-developed episodic sequel-series entitled The Silver Lining that Activision let the developer publish under a non-commercial license agreement.
As a major fan of King’s Quest, and other classic Sierra titles, this saddens me quite a bit. This was the Telltale game that I was truly looking forward to myself.
Source: Digital Trends