I hope this is true so long as we get lots more details within canon about the Eugenics War and Khan's role in it. That's about the only details of his life that really needs much fleshing out. His life in exile on Ceti Alpha V could serve as a framing story with the Eugenics War being the show's main story.
This is a good point. Just because the (at this point theoretical) show begins on Ceti Alpha V post
Space Seed doesn't mean it's the only time and place the show can cover. At the very least one would expect some kind of Earth based flashbacks to establish the world the characters behind and who they were there. 20th century Earth scenes would make a nice contrast to any alien world survivalist stories. (The obvious comparison here, narrative structure wise, would be
LOST--I know that comparison isn't going to endear the concept to anyone, but no matter what you think of that show in general, it had a narrative technique that worked for television.)
I have no idea if this rumor is based in truth, or if it is, what kind of chance we'll actually see it happen, but the more I think about it, the more I can see why CBS would pursue the idea.
For one thing, Khan is one of the things from Star Trek that's recognizable outside of the franchise--in terms of film villains, he's almost up there with Darth Vader and Hannibal Lecter, both of whom had their backstories spun off into fairly successful television. It's something that could potentially draw both hardcore Trek fans and people who might tune in to watch a regular Trek show. Everyone loves a good baddie.
It would also nicely complement Discovery, an expensive show that relies heavily on VFX and elaborate sets, props, and costumes that have to be designed from scratch. A Khan show would be less expensive to produce, as the two likely settings would be Ceti Alpha V and some version of contemporary/1990s Earth. Series like this one would be a good way to hold keep people subscribed to All Access in between Discovery seasons.
The very nature of the show would be one that has elements common to a lot of the popular programming on cable channels: a select group of attractive, powerful people, with the potential for political intrigue, infighting, sex, and violence. It's not "Game of Thrones meets Trek", exactly, but it's certainly a potential way to tell a very un-Trek like story within Trek continuity.
Limiting the action of the show (barring flashbacks/flashforwards) to one planet
sounds like a bad idea at first, but we actually know little about Ceti Alpha V--we saw one small part of the planet in Enterprise, and we know it's inhospitable and in a system that hasn't been charted well. That's about it. There's a lot of potential for dangerous flora and fauna, hidden ruins/tech, other castaways, etc. Plus there's the mystery of what happened to Ceti Alpha VI--planets don't just unexpectedly explode.
I'm not sure I'd be pushing for an ongoing Khan series, but there's certainly enough material for a one-off. I would say it would be strange to re-cast Khan, especially in the middle of Space Seed and Wrath of Khan, but there's a Benedict Cumberbatch-shaped elephant in the room that makes it easier to conceive. (Not to mention the four Sareks, two Mudds, and Tony Todd as adult Jake Sisko.) It's also possible that they could feature another Augment in the starring role, with Montalban being recreated for background machinations via soundalikes and VFX.
(Bringing back Cumberbatch himself is a possibility, I suppose, as he's no stranger to television and would be a draw in his own right, but that wouldn't just be opening a can of worms--it's a whole case of them. Personally, I'd think it would be cool, but I can see why there would be huge problems on every conceivable level.)
So economically, dramatically, and logistically, I can definitely see why CBS could and would pursue this. Whether they
should is another question entirely. But I don't think there's anything wrong in having some spin-offs that are wildly different from the main tone and purpose of Trek proper. (And hey, if this works, maybe we could finally see an Assignment: Earth sequel!

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