Once upon a time, a Sega Genesis console game with a great theme and horrible execution, Beast Wrestler.
Arena combat. Loser and victor get dumped in a blending vat after the combat, and out emerges a hybrid.
I wish there were a game:
Both arena and open world combat. Players are owners/managers/pilots/psychic masters. Combatants are one of three: Kaiju giant monsters similar to godzilla, king kong, etc, controlled psionically; Giant Mecha Robots with pilots inside; Cyborgs, a blend of both. Victor in combat gets to salvage / harvest the DNA and parts and limbs and stuff of the vanquished.