Mortal Kombat was released in coin-op form in 1992
. It was an evolution on the earlier game Pit-Fighter
(again using digitised photographs as the basis of its sprites), with a game style that was heavily influenced
by Street Fighter II
. Fundamentally, MK was a cash-in
on SF2's popularity, which strove to differentiate itself from its illustrious rival by being extremely gory
(a feature which went some way to distracting many players from the amateurishness
of the rest of the product). You may get the impression that I think that the game is shit (I do) but I concede that many people love it although I doubt that many would go as far as calling it a classic
To claim that Mortal Kombat was "the game that changed the games industry" is laughable. The gore gimmick had been done to death already by this point (The Immortal, Moonstone, Barbarian, Wolfenstein 3-D, etc.) although seldom within such a high-profile game. The claim that it drove a wedge between Sega and Nintendo's home console offerings is suspect as well, as although the game sold in large numbers, it was dwarfed by many other titles on each machine and was basically a routine arcade port (although again riding on the coat-tails of SF2).
Going on to cleave the games industry into two camps from this point fails to work, although to be fair it is a common misconception often repeated in the media that 'all Nintendo games are for kids' and that only their rivals can offer so-called 'mature' content (and therefore only they can hold any interest to older gamers- as anyone who owned a SNES or N64 -home of brightly coloured yet extremely deep games- as well as a -tough, sexy, but ultimately vapid- Playstation can easily refute). Sega and Nintendo were always complex and highly different beasts, their different handling of MK is a very minor footnote to this.
As for the political/scandal/censorship side of the story, while one that was documented extensively at the time, is also a bit of a non-event. Games have been the subject of sensationalist witch-hunts almost from their inception (indeed a motion was tabled to ban Space Invaders on its release in the UK- luckily unsuccessfully). This had no detrimental repercussions in law, and only short-term ones in society, as far as I am concerned.
Mortal Kombat does nothing to legitimise the inclusion of 'mature' content in games. It was an inane, exploitative venture at every stage of its life. If anything, it was quite harmful to the general public's perception of video games (as was Tomb Raider). Incidentally, DooM and its sequels sold comparable numbers to MK, and led to exponentially greater innovation in content and technology. (Whereas MK led to... more MK. Hmm.)
MK responsible for survival horror? Seeing as Alone in The Dark predates MK, and MK is not even remotely a 'survival horror' game, I think we can dismiss that claim without further discussion. Ditto for 'crime' (if you can call a setting/subject matter a 'genre'). Video games became more targetted to older players because the people who play them got older. It really is that simple.
To suggest that the death of arcade gaming is being brought about by censorship laws is purely fantasy. Arcade games are dying because of over-reliance on a few genres (racing, shooting, fighting), but mainly because of the ubiquity of powerful consoles and PCs. Incidentally, Midway have pulled out of the coinop sector because all their subsequent games were Pure Shit, and their tired, extremely dated technology was deeply unattractive to the player. (And anyway, the arcade sector will probably never completely dry up, as long as a few developers are able to make money from it- witness Namco's collaboration with Nintendo regarding the Tri-Force board).
Mortal Kombat spawned several sequels as well as two feature films and a TV series. The best of the sequels is probably Mortal Kombat II, which was excellently ported to the 16-bit consoles by Probe ("Toasty!"). It was enormously commercially successful, but in my opinion you would be hard pressed to glean much enjoyment from playing it today.