I don't think that's enough. Even if you look at SC2 by itself, its story appeal was very very weak. The fact its story was repeated for 2 more games is unfortunate, but I don't think that was the problem.
I think the biggest problem is how they set up the story mode where each character is doing the same thing (killing the last boss and then trying to get something he has) and have an ending for each character. I'd rather have a single story mode which tells a long story, instead of 25 mini stories which are short and mostly filler.
They could still keep arcade mode as it is, but just remove the whole story part from it. As far as I'm concerned, that's a relic from the arcade days of fighting games and there's no point in using it to tell a story.
If perhaps Odashima is serious about how he and Harada have been paying attention to the recent MK, then who knows? Maybe they might cite that game as a means of going about this in a way that might satisfy people who really yearn for this type of stuff. (Arcade mode for the traditional stuff, Story mode for those who want a longer narrative).
But let's keep this much in mind: we're talking about a FIGHTING GAME here. NOT a RPG. NOT a Visual Novel. Hell, not even like some other action games like InFamous where there is some semblance to a plot and characters that change dynamically.
If you really want that much in the way of a gripping narrative, I think you set yourself up for disappointment, because fighting games are, inherently, NOT those types of games. And the reason why is because, at their roots, Fighting Games, especially now-a-days, are character-driven, fanservice-appealing games. How can one hope to tell a good story, without real character progression/evolution and plot resolution? But at the same time, you recognize that you take big risks if you try to do ANYTHING akin to possibly doing something that might jeopardize a character's standing in the roster, pissing off their fans on the same token?
I mean, these last 9 pages alone should be indicative of that much. How many posts are there relating to people worrying about their fates of their favorite characters in this 17 year jump, as opposed to those who actually are interested in "seeing where they go next with the story" because of that jump? As long as the former clearly outweighs the latter, you can only hope for so much when it comes to storytelling in fighting games.