Like many sequel Disney movies in the late '90s and early 2000s, the planned Jungle Book 3 was unfortunately canceled. The series had two films and had many characters feature and star in the Disney animated series, TaleSpin.
Though not much was revealed about the canceled Jungle Book 3, the plot for the movie had already been formed before it was decided to scrap the project altogether. But after hearing the idea of what the third movie would have been, some fans are actually pretty glad it didn't work out.
Would Have Been A Continued Storyline To 1 & 2
This may be an obvious one, but Jungle Book 3 would have been a direct sequel to Jungle Book 1 & 2. This is important due to the fact that Disney went through an era of making many prequel films in the form of sequels such as Tarzan II, which took place when Tarzan was a child instead of after the events of the first film. Another example of this is Bambi II. The Jungle Book 3, however, would have taken place after the events of the first and second films.
Shere Khan & Baloo Sold To The Circus
One of the major plot points in this film is that Baloo, along with Shere Khan, is somehow sold to the circus. They are forced to perform and become circus animals. Little is known about how or why these animals got sold to the circus, or who was able to capture them and sell them without being noticed by the neighboring human village who knows of Baloo and Mowgli's relationship, but somehow the villain and the hero get trapped together.
Mowgli's Rescue Mission
Once Mowgli finds out about Baloo and Shere Khan's entrapment at the circus, he almost immediately bans a group of his friends together to go save the pair. Though it is unclear of which friends he takes, we would have to assume it may be characters from the previous two films.
King Louie and Bagheera, of course, and maybe his new friends Shanti and Ranjan would have most likely accompanied Mowgli on his quest to rescue them.
Shere Khan Regrets His Actions
While Mowgli is on his rescue mission, and he is trapped in the circus with Baloo, Shere Khan begins to regret his actions. He regrets being the villain and regrets being a man-eater, regrets trying to go after Mowgli all those times. It's a pretty strange time for a shifting villain arc, considering it occurs in the third film of the series, but also adds some complexity many fans probably weren't expecting out of this film.
Shere Khan Is Reformed & Forgiven
Once Mowgli saves Baloo and Shere Khan, breaking them out of the circus, Shere Khan feels reformed and brand new. He follows through with his villain-to-hero arc and actually tries to be forgiven by Mowgli and helps the young boy and their friends while escaping. The wording the description used was "reformed" which totally implies that Shere Khan dropped his evil ways and became like a new character.
Poor Reviews For Jungle Book 2
Though The Jungle Book 2 was originally made for direct-to-video, but was the third Disney sequel to get a theatrical release instead, after The Rescuers Down Under in 1990 and the Peter Pan sequel, Return to Neverland in 2002. The Jungle Book 2 was released in theaters in February of 2003 and while it became a pretty wild box office success, the reviews and critics for the film were more on the negative side. The animation was largely frowned upon (as it was made for video) and the plotline was criticized for being too similar to the original.
John Lasseter's Disney Promotion
Another big factor that heavily contributed to the cancelation of The Jungle Book 3, was the promotion of John Lasseter to principle creative advisor in 2006. Lasseter oversaw all of the new Disney animated works and projects, trying to revitalize the dying company. This was in Disney's second Dark Ages (also known as Disney's Experimental Era) that came post-Renaissance.
Disney was coming out with films and sequels that just weren't performing as well as they had been, and the studio started to release films that were significantly low performing between 1999 (after Tarzan) up until around 2007. The only real success of this era was Lilo & Stitch. This was why Lasseter needed to change things up. He canceled every straight-to-video film that was to be released, including The Jungle Book 3.
Voice Of Shere Khan Passed
Tony Jay, the voice actor of Shere Khan in TaleSpin and The Jungle Book, unfortunately, passed away in 2006. This was just another added reason why the film was canceled. The team behind the film didn't want to replace Jay as he had become the new voice of Shere Khan since the original film in 1967. Tony Jay had worked with Disney a great number of times, most throughout the '90s, and is well known for being the voice of the evil villain, Judge Claude Frollo in The Hunchback of Notre Dame.
The 2016 Live-Action Overshadows Animation
Though the film had been canceled by 2006, the film is officially never seeing the light of day now due to the 2016 "live-action" film of The Jungle Book directed by John Favreau. The Jungle Book was a loose adaptation of the original film and was also the third live-action film in Disney's newest wave of converting the older animated works into live-action. Tim Burton's Alice in Wonderland released in 2010, and due to its success, Disney made Cinderella in 2015 and The Jungle Book in 2016.
Permanently Canceled With No Hope Of Return
With all of this said, The Jungle Book 3 has been listed as permanently canceled with no hope of returning. Many fans feel like if the film were to be made now, it wouldn't even make that much sense. The plot seemed a bit random and considering it has been over 50 years since the original film was released, seeing Shere Khan's reformation would have felt odd and uneventful. To many fans, it is a good thing this film was permanently canceled.