Unsurprisingly, Mane 6's negotiations with Hasbro over the C&D of Fighting is Magic didn't go all that well, and as most folks have already heard about Lauren Faust's offering to design new characters for them it should come as no real shock that Mane 6 decided to take up the offer. This means that Fighting is Magic will no longer be a My Little Pony fangame, but take place in its own setting with unique characters and have pretty much the same stuff as Fighting is Magic (with the notable exception of colourful equines).

 Also, a while back the dev team behind Skullgirls, Lab Zero Games, offered their engine to Mane 6, but there has been no official response as of yet. I believe that Mane 6 should accept the offer, as this would give them the opportunity to publish their game to consoles and use high definition sprites instead of being limited to 480p. It would mean that they would have to rewrite most of the characters, yes, but they could potentially end up with a higher-quality product by taking this route...

Sick of my rambling on the Skullgirls engine? Then visit Mane 6's original blog post for some more detailed information on the situation, along with a quote from Lauren Faust (and not a single mention of Skullgirls to boot).