Telltale confirms that they are no longer working on King's Quest while Replay Games explains that Activision have plans for the series permitting them the ability to produce remakes of the original game.
via N4G: pc news feed http://n4g.com/news/1224969/telltales-kings-quest-canceled-activision-planning-something
via N4G: pc news feed http://n4g.com/news/1224969/telltales-kings-quest-canceled-activision-planning-something