The reason I say "Was" is because Hasbro finally gave them a cease and desist when they were very close to it being released. The Mane6 team knew that was a possibility for a while, they had actually been working under that possibility.
However, recently some fans put the almost complete build up for a slot at EVO (a prominent fighting game tournament) and it's widely speculated this is why Hasbro had to step in. The game was always unofficial and when it was just some bronies and some fighting game fans who knew about the game it could not severely damage the MLP brand. However, going for the slot (even against the Mane6 development team wishes) may have forced Hasbro to take notice because the game IP and fighting style could have lent the idea that Hasbro endorsed both the game and the idea that their main characters could fight each other.
After several attempts, work arounds, and other ideas, the project has been cancelled. The current build will not be released. There is an old build going around, but that was leaked and incomplete.
However, ALL IS NOT LOST!!!
Lauren Faust, creative producer and designer of this current generation of My Little Pony (The Friendship is Magic part) is now apart of the Mane 6 team. She is developing a new IP for them to use and the team has confirmed that the IP will include (if not based up) four legged creatures. (As most fighters use two legged creatures, the four legs did add a new dimension)
Not much is known beyond that. And Mane6 has taken down all their previous development posts. But, in those posts they discussed how the abilities they gained working on Fighting is Magic would help them as they went forward and now that they have a new IP they don't have to worry about any sort of Cease and Desist order from Hasbro or any other company.
Beyond that, we're just waiting for information.
Good to hear! It would be such a shame if all that work had gone completely to waste.
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