“The third game involved you, as a player character, following where Revan went and then taking the battle to the really ancient Sith lords who are far more terrifying than the Darths that show up," Avellone said. "These guys would just be monsters. These would have a level of power that was considerable, but at the same time you’d be able to dig more into their psychologies, and their personalities, their history, and even how they dealt with the player, how they talk with the player, the different powers they cultivated and developed, and for some of them like – they’re the ancients, so they’re not just ruling a solar system, [but] swathes of the galaxy."
Avellone describes exploring parts of the galaxy that the ancient Sith had "left their stamp" on, which makes the game sound like a horror thriller in some respects. In fact, it sounds like much of the storytelling would come through your exploration of these environments and the few details of what happened that you'd find along the way. Despite the ominous nature of these expeditions, though, Avellone says that you would have actually been able to find out quite a lot about the ancient Sith as opposed to the way that the recent Star Wars films didn't reveal much about Snoke.
While Avellone also suggests that Obsidian wasn't necessarily promised the chance to develop a third Knights of the Old Republic game, he's also not entirely sure why the project was canceled.
“I think part of the reason, and I’m just speculating, is that I think there was a team internal at LucasArts at the time that wanted to do it,” Avellone said. "So obviously they would have gotten priority over us. So I think that was one factor. Another factor is I think that… BioWare tried to do it a few times. They tried to pitch it and tried to pitch it, and were like, ‘Hey, we’re going to do a third game.’ But it just never seemed to actually go anywhere."
We've heard about that BioWare pitch before, and Avellone also goes so far as to suggest that the reason why we haven't gotten a third KotOR game from anybody may have something to do with the series' overall sales or the industry's general disinterest in single-player experiences. However, he admits that he doesn't really know the answers to these questions.