They should go the Street Fighter: Legend of Chun Li route and focus on a small selection of characters. I think that it would be awesome to see a Mortal Kombat movie about Sub Zero-- it could be like a classic Ninja revenge movie, but taken into the 21st century with real hollywood production values.
Basic story outline as follows: Sub-Zero I kills Scorpion in the past. Scorpion returns as a zombie / ghost Ninja, and kills Sub-Zero I. Sub-Zero II wants revenge, and goes on an epic quest to gain the power needed to defeat him. He fights several classic MK characters along the way (including Raiden, who is his typical wise mentor self). Eventually, he discovers his Cryomancer heritage, and unlocks his power to freeze. Scorpion resurrects Sub-Zero I as a ghoulish peon(technically "Noob" by MK game canon), and sics him on Sub-Zero II. Sub-Zero II must destroy Sub-Zero I to survive, and emotional content ensues. Sub-Zero II re-kills Sub-Zero I and fights Scorpion. Sub-Zero II wins. Simple, effective, and badass.