I get the impression that people sporadically work on HL3, but it’s a back-burner project that doesn’t have a full-time dev team on it. Given the expectations, it’s understandable, as they’d want to have some pretty strong play to justify its release. It’s not too dissimilar to other studios with sequel games and some financial autonomy. (As opposed to publisher-owned studios that are going to crank out sequels to popular franchises regardless of whether they have anything new to add.)
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