Some time after the release of Soul Reaver, it was revealed by Denis Dyack (of Silicon Knights) that it had originally been intended as a standalone title, and was altered to become a sequel to Blood Omen instead.
Silicon Knights had developed Blood Omen in association with Crystal Dynamics, and after its release there was a legal dispute over ownership of the rights to the series. The two companies eventually settled their disagreement out of court, with the specifics remaining undisclosed.
Dyack's description of Soul Reaver's origins was brief:
Even so, a number of fans of the original Blood Omen were quick to assume that this was evidence that Soul Reaver had been quickly modified into a Kain game through the equivalent of filing off the serial numbers. This is certainly not the case. No actual production work was ever done on Shifter as a standalone title - it was strictly a paper design document. Although its influence on the final game is obvious, Soul Reaver was firmly set in the same world as Blood Omen before any other work began on it.
Some fans further believed that because the concept was revealed by Dyack, Shifter had been a Silicon Knights project which was "stolen" in some way by Crystal Dynamics. This is also incorrect.
Dyack has disclosed separately that Silicon Knights intended to produce a Blood Omen sequel, but has not elaborated on the details other than to comment that it would have been very different than the direction Crystal Dynamics took the series in. Given that "Legacy of Kain" is actually the suffix of the first Blood Omen, it is entirely possible that their plan was for a sequel (or sequels) with a different (anti-) hero altogether, and that the result would have been something more like the next game they created - Eternal Darkness.