If you somehow missed Knights of the Old Republic and its sequel way back when it was released, then you might have just missed out on what's probably the best two Star Wars games ever made. No, The Old Republic doesn't count and can't even be compared.
While KotOR 1 was developed by BioWare, Knights of the Old Republic II was deveoped by Obsidian Entertainment (Alpha Protocol) and was generally was not as well-received as its predecessor.
In saying all this, it seems Obsidian wants to work on KoTOR III! That can either be good or bad news, depending on your point of view. Reddit user Slappybags9 (via DSOGaming) asked Obsidian whether he could add KoTOR II to his Steam collection; not knowing that the game was recently released on Steam. Obsidian replied to let him know of this fact and then the talk diverted to KoTOR III.
The Facebook conversation can be seen below.
Keep in mind that this DOES NOT confirm that Knights of the Old Republic III is in development, nor that Obsidian is somehow involved with the project. It also bears mentioning that even if Obsidian wants to make it, that doesn't necessarily mean it's going to happen. Case in point, I want to develop a flying car, but that's not going to be happening anytime soon.
Of course, seeing as BioWare's MMORPG The Old Republic isn't doing as well as LucasArts could have hoped, perhaps going back to the KoTOR well isn't really a bad thing, no? To be honest with you, I wouldn't say no to an HD collection of KoTOR I and II re-released for current-gen platforms…and I suspect, a lot of people wouldn't mind it either.
Would you want Obisidian to develop KoTOR III or should it be BioWare again?
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