After playing Injustice 2, I can see the potential of a Netherrealm MOTU fighting game game

 Netherrealm Studios are known for Mortal Kombat and Injustice. They're no Capcom or SNK, but they can pull off decent fighters. An Injustice type game would be more suited for MOTU than a Mortal Kombat styled game. So, in Injustice 2, the TMNT are 1 character. You can use all 4 turtles, but it depends on the Weapon you equip them with. Katana = Leonardo, Bo = Donatello, Sai = Raphael, and Nunchaku = Michelangelo. Special moves and some basics change between each turtle... Let's take that idea and apply it to MOTU.

We have He-Man:

Using the Injustice style equipment settings we have:

Headgear

Torso gear

Arm gear

Leg gear

Weapon

In Injustice, your gear has multiple reasons for existing: 

Altering character stats, Cosmetics, Enabling alternate moves.

OK using the Injustice style equipment settings we have Headgear:

For He-Man's case it could mean Hairstyles:

80s Toy, Filmation, New Adventures Ponytail, New Adventures Mullet, New Adventures Helmet, 200X hair, Revelation savage hair, etc.

Torso gear:

Iron cross harness, Asterisk harness, H harness,Battle armor, Thunderpunch armor, Flying Fists armor, Snake Armor, Rebel Cape (87 movie), NA armor, NA harness, 3DCG Armor to name a few.

Leg gear:

Furry Boots with furry underpants, Furry boots with loincloth, Rebel Trunks with armored grieves, Laser Boots with trunks, NA Tights with future boots, Snake greaves, 3DCG Tights, etc.

Arm gear we have:

80s toy, 200X, NA, Filmation, 3DCG, Rebel, savage, etc.

Weapons is where the fun starts:

Here we have a couple of disciplines

Axe:

Vintage 80s to, Battle Armor, Savage would be the main looks to benefit from this discipline.

Sword and shield:

80s toy variants, NA, 200X, Revelation would be the main styles to have this discipline. 200x gear having the "greatsword effect" meaning slightly increased range and power vs loss of speed.

Sword only:

Filmation, 3DCG, 200X variants, NA, and Revelation would be the main styles. With 200X and 3DCG having the "greatsword effect"

I talked about different moves and stat changes with gear. OK, with Snake Armor bracers, He-Man unlocks the Snake pinchers, a grab move that can reach the opponent from half screen and bring them towards your fist for an attack.

Flying fist Armor replaces the normal He-Man super move with an attack using the vintage spinning mace toy.

In the case of Skeletor, the Dragon Blaster armor would replace a magic blast type of move with the Dragon's mist.

The Weapon disciplines of Skeletor would vary between Havoc staff, Sword, Dual Swords, and staff and sword.

Like in Injustice, some loadouts and palettes can unlock other characters. Like say, using the Staff of Kar-Tor, swaps Zodac for Zoadk. Swapping Zodac's gun for the strobing Rifle unlocks Strobo. Like in Injustice, these unlocked characters get invisible perks from the rest of the gear and have only one look. In Faker's case, he'd be a specific palette for He-Man that the game recognizes as Faker with special gear that only he can use (Skeletor Harness and Battle Armor specifically)

Adam would be a separate character from He-Man.

For King Grayskull, I'd make him a DLC. He would be based on the Revelation version. A trophy/Achievement would be unlocked by having KG fight a He-Man wearing Revelation Savage hair, Rebel Armor and everything else being 200X. The Achievement/Trophy would be called Facing the Past King. A nod to King Grayskull originally being a Long haired He-Man.

Sadly Mattel wouldn't approve of my other Trophy/Achievement idea, which would be based on the previous situation, but reversed. I would've called it: Once you go Black...

Storywise I'd like a completely different continuity inspired by classic lores (basically Everything before Netflix's 3DCG series). Mattel should clear the stuff that would be needed to be cleared in order to access She-Ra stuff and have it as a "huge DLC"... kinda like one of those Witcher expansions

The idea is to have MOST OF THE "AVERAGE ADULT HUMAN SIZED AND SHAPED" characters from the original MOTU line to be playable as the base game... except Sorceress for plot reasons. Orko and Gwildor for Size issues. Then via updates have a few random characters (Palace Guards, Skelcons, etc.) available and unlockable through gameplay. Themed DLCs like Tales of Preternia, Memories from the Great Unrest, Rise of the Snakemen, The Liberation of Etheria (assuming the She-Ra stuff gets cleared if not, Hordak's Revenge would introduce The Evil Horde). All of this is just to achieve the "DEFINITIVE MASTERS OF THE UNIVERSE VIDEOGAME" if it does well and can get a sequel, then good, but if it doesn't, at least we have the most badass MOTU fighter possible (developed in the west). Personally, I'd prefer a Capcom fighter, but I can't see Capcom interested in MOTU.