Killer Instinct had a mighty impressive showing and TYM lit up when it was revealed. I almost spit out my cola when I saw the footage because I was typing a message and then heard fucking "GLACIUS" so I immediately stopped what I was doing and looked at my monitor to see if my eyes could match what my ears had just heard. For this reason KI will sell well.
Now, given the business model that is chosen for the game MS is to mimmick the shocking success that is LoL. This game is cartoony with out dated graphics yet it blows StarCraft 2 out of the water and every other Twitch game and competitive game out of the fucking water. It has more views on an off day than most games have on live tournaments. It is not a bad business model because the barrier to entry is all but eliminated and 5$ a character is perfectly reasonable. The argument about not knowing which character you like is very weak because for 5$ you really can't complain. For those of you conjuring up an argument against thing, just remember that a lot of people buy things in every day life for 5$ and they are not sure if they will enjoy it (movie, rental, magazine, book, food, drinks, snacks, smokes, etc) and they don't think twice about it.
It may be tricky for some joints to setup Killer Instinct but others may already be ready for it. For instance, my local scene is very small yet the internet issue won't be a problem and there are other places who will man up and buy the necessary gear to run this kick ass game.
You never know once the company becomes aware of the offline tournament scene issues they may simply decide to release a Tournament Edition that is your 60$ for all the characters =)