The development team from Re-Logic announced today that Terraria: Otherworld, the sorta sequel to Terraria has been canceled, due in part to the idea that they weren't satisfied with the progress the game was making toward being completed. The announcement was made on their forums as they let fans know of their decision and the progress made, of which we have a snippet from that below. The focus now for the company will be to make the core game better and hopefully utilize some of the ideas from Terraria: Otherworld in the future.
As you all know from when we first announced the game a long while ago – and as we repeated in our subsequent posts – Re-Logic's focus has and always will be on delivering complete and quality game experiences to our fanbase. Just to underscore it once more, this means that we will not compromise game quality for speed to market or for any other reasons within our control. Our team has a clear vision for this game – one that we shared with all of you with much shared excitement – and, in spite of all of our efforts, the current state of the game remains equal parts far from that vision and beyond behind schedule from our initial planning when we shared Otherworld with all of you three years ago. Progress has absolutely been made during that time – but unfortunately, a very thorough status review of the game versus its intended design showed both the Re-Logic and 505/Pipeworks teams that things were quite a bit further away from the finish line than we had imagined. Taking the massive amount of work that would be remaining to complete along with the extensive time it would take to get that done, and how that would greatly interfere with the pursuit of other projects on behalf of Re-Logic – it becomes clear that this leaves things in a very undesirable state.