- Shang Tsung's shapeshifting, a visual effect inspired by Midway's previous work in the Terminator 2 arcade game, functioned rather sensibly, as the storyline would have suggested. Which is to say, it functioned pretty much like the guy in Terminator 2.
- Raiden, lord of thunder, war, and exposition, explains that tournament was designed to protect the aptly named Earthrealm from Outworld invasion. The rules dictate that if Team Outworld can win ten consecutive tournaments, they get a coupon that can be redeemed for one free invasion of Earthrealm. Goro, prince of the Shokan, ruler of Kuatan, and all-around jerkoff, has won the last nine.
First off, Goro has been champion for 500 years, having won nine consecutive tournaments. Assuming the tournaments are held at regular intervals--the tournament in Enter the Dragon was every three, and the MK movie says "every generation"--this would put the canonical tournaments on an interval of slightly over fifty-five years. Olympic hopefuls have difficulty being in prime shape for contests held every four years, mind you. Had be been born a decade or two earlier or later, Liu Kang might have had to compete when he was 11 years old, with options to try again at 66 and 121. On the bright side, Liu Kang's victory in MK1 guarantees the safety of Earthrealm for another 500 years, which is helpful because he'll be pushing 80 when next called upon to defend his title.
More to the point, this would seem to make MK2 an even more irrelevant display of puffery. Were it an "official" tournament--it's not, according to later canon rules--our heroes would be forfeiting a couple of human generations' worth of freedom for what is essentially an interdimensional gang war. There seems to be no actual victory to be had in the Outworld tournament: best case scenario, according to the "ten wins" rule, they've protected Earth for another three-hundred-sixty-five days or so. One supposes that killing Kahn would end the threat entirely, and since Kahn's defeat results in his body turning to stone and exploding, we'll have to assume that Earthrealm's warriors are hoping to kill the possibly immortal sorcerer-warlord in straight-up arena combat, in a tournament that has thus far failed to kill anyone of any importance at all. Statistically speaking, the Mortal Kombat tournament seems to be significantly safer than pro wrestling.
MK had never been a favorite of the gaming press, and the critical popularity of the Street Fighter provided no shortage of comparisons. By the time MK3 was approaching its arcade release, Capcom had released Super Street Fighter II Turbo, the fourth consecutive non-sequel upgrade to a brilliant game released four years earlier. While Street Fighter's narrative remained oddly frozen in time, and most of the new cast were widely despised, the gameplay had been finely tuned with an extraordinary eye to subtlety. Critics and players alike applauded the narrative trappings and secret content MK had successfully imported from adventure games, but the general stiffness of the gameplay was getting more and more apparent in light of the competition. It was in this context that the world, represented here by a thirteen-year-old boy living in Florida, got its first look at MK3, and discovered...
Well, it looked pretty much the same as the last one. In terms of gameplay, MK3 would respond to critics who harped on the lack of gameplay differentiation between characters, overreliance on palette-swaps, and an engine that disproportionately favored defensive tactics by implementing a series of changes that would halfheartedly address one of these problems, while actually making the other two worse. (Ultimate MK3 would go the extra mile by fucking up the palette-swap reduction as well.) To be fair, it was a much tighter engine in general, removing the sense that we were operating our avatars by remote controls with dying batteries, and Gathering-of-Developers bless their little hearts, the designers had been pretty ambitious in terms of character design. Five characters were dropped outright, and some of the new faces replacing them brought some legitimately new gameplay concepts with them. Additionally, these concepts were well mapped to narrative conceits. But that brings us to the story, which is actually what these interminable goddamn posts are about, in case you've forgotten.
Shao Kahn has invaded Earth. How? Well, it's unclear. The early press for the game said that he had won the Outworld tournament, which would suggest a double-or-nothing principle that makes the heroes' decision to participate even more insane, and which would seem to fly in the face of the soon-to-be-canonical "ten wins" trope. No, the story behind Kahn's invasion of our beloved realm is much more interesting than that:
For centuries Earth has used Mortal Kombat to defend itself against the Outworld's Emeperor Shao Kahn. But, Kahn becomes frustrated by failed attempts at taking Earth through tournament battle. He enacts a plan which began 10,000 years ago. During this time Kahn had a Queen. Her name was Sindel and her young death was unexpected. Kahn's Shadow priests, lead by Shang Tsung, make it so Sindel's spirit would someday be reborn: Not on the Outworld but on the Earth Realm itself. This unholy act gives Shao Kahn [sic] to step through the dimensional gates and reclaim his Queen. Thus enabling him to finally seize the Earth Realm.
Upon breaching the portal into Earth, Shao Kahn slowly transforms the planet into a part of the Outworld itself. Kahn strips the Earth of all human life: Claiming every soul as his own. But there are souls which Kahn cannot take. These souls belong to the warriors chosen to represent Earth in a new Mortal Kombat. The remaining humans are scattered through out the planet. Shao Kahn sends an army of fierce Outworld warriors to find and eliminate them.
We have no idea. The game doesn't actually mention it. If there weren't the odd mention of having "escaped" from Outworld, the game would have made no acknowledgment of MK2 having happened at all. So MK has now effectively (albeit temporarily) retconned out its most popular entry, in the process of rendering its origin and namesake largely irrelevant. Fans were, of course, free to imagine how the previous entry might have played out, safe in the knowledge that, according to the canonical story, no outcome of the Outworld tournament would have had any appreciable impact on anything at all.
By 1995, MK was ably bringing in money from a variety of revenue streams across multiple media, but the bulk of it was always adaptation to home consoles. Over in that neck of the market, the inauguration of what wikipedia helpfully denotes as the fifth generation was about to begin, and the wheeling and dealing over platform exclusivity would exert its own suck on the MK franchise. Some of it can be blamed on the Street Fighter trap, the tendency to advance a series' ludic elements while leaving narrative elements to stagnate, but mostly the black hole into which the series would soon sink can be blamed on a fateful decision to start taking design cues from the most unreliable, unimaginative, and thoroughly idiotic source imaginable: the series' fans.