It seems that System Shock 3 has been indefinitely shelved as the development team is "no longer employed." The writer and director, lead programmer, design director, QA lead, senior environment artist, and more have all confirmed their exit from OtherSide within the past five months -- in total at least a dozen senior staff.

Oherside's former community manager, Sam Luangkhot, also confirmed the layoffs at the studio. According to her statement, "I know people are concerned about the state of the studio. I’d be lying if I said I wasn’t worried as well." She continued: "Having played the internal SS3 demo, I know the Austin team worked their asses off and made some stunning progress in the past couple of months. It hurts to see many of these developers out of a job on a project they worked so hard on."

Luangkhot also linked to post from an anonymous developer on RPGCodex reiterating that the team was no longer employed with the company and that it was "critically behind" in content creation. They stated:

If Starbreeze hadn’t gone into crisis I think we would’ve delivered something interesting with some fresh and innovative gameplay, but a much smaller game than what people were expecting and inevitably disappointing for a sequel to such a beloved franchise. Those high expectations drove a lot of expensive experimentation. We were a small team and knew we couldn’t compete with current immersive sims in production quality and breadth, so we had to be creative and clever and weird. And we were on our way to make something unique and possibly fun, but probably not what the audience was hungry for.

System Shock 3's first trailer was revealed during GDC 2019. Series creator Warren Spector gave a keynote presentation to reveal that the upcoming and long-awaited title would be built utilizing Unity, while also debuting the first in-engine look at the title through a new teaser trailer. The latest footage for the game, meanwhile premiered as recently as September 2019. A one minute trailer showcased some promising pre-alpha gameplay, featuring creepy environments and series big bad RODAN toward the end.

Back in February 2019 former publisher Starbreeze sold the publishing rights for System Shock 3 back to Otherside Entertainment following a financially disappointing 2018. The publisher had attached themselves to the game as far as March 2017 and at the time Starbreeze claimed to have plans to invest $12 million into the project, with Starbreeze’s CEO even stating that the publisher was a fan of the series and "greatly looking forward to bringing System Shock 3 to players."