The game, described as sci-fi thriller, puts the player in control of a space station AI in order to recover from the sudden, mysterious loss of its crew.

The player, by manipulating SAM, can control various elements of the station, such as opening or closing hatches, activating safety systems and the like.

Dr. Emma Fisher (Kezia Burrows), the station's medical officer, tries to restore contact with Houston as well as the other five members of the crew to ascertain what has happened, without success.

SAM recovers after an unspecified period of time has passed, to the sight of Emma having been rendered unconscious following the second event.

As Emma restores limited functionality back to SAM, he attempts to re-interface with the rest of the space station and reconnect to his own components.

After extinguishing the fire, they discover an unidentified substance on a blank plate that Emma describes as a dark red oil.

SAM informs her that a module has become dislodged, and severe stress is being applied to the station, prompting recommendation for her to eject it.

However, the Hexagonal cloud pattern on Saturn begins to flash repeatedly, and Mae is left adrift in space.

A strange hexagonal object then appears to both SAM and Emma and communicates to them in a geographic glyph language before disappearing.

SAM manages to find several back doors into the station's systems, interacts with the signal to Earth and warns them about the situation.

When they wake up, Emma and SAM find their consciousness has merged, allowing them to share a single body, and they are back on Earth by some means.

Game director and No Code co-founder Jon McKellan had previously worked at Creative Assembly, where he was the lead user interface designer on Alien: Isolation.

[5] No Code initially began work on a demo version of Observation in early 2016, showing it to game publishers in hopes of getting a contract with them.

[4][8] This led to the development team creating an anthology of games built off of The House Abandon, released as Stories Untold.

To simulate the lack of gravity in space during motion-capture acting sessions, the team pushed an animator around on a bar stool.

[5] To give the player a sense of "[feeling] like an alien entity of some sort",[5] No Code iterated on developing interactions that relied on a machine's understanding of how to perform a task.

For example, instead of pressing a physical button on their controller to open a door in-game, players — as SAM — had to establish a connection with another system first.

[10] A few months before the game released, the developers engaged in focus tests to determine problem areas where the testers felt frustrated or lost.

[15] Devolver Digital later stated on March 25, 2019 that Observation would be sold on PC exclusively on the Epic Games Store for one year.

[19][20] Destructoid called the game "expertly paced" but also complained of occasional hiccups when some of the puzzles became "a point-and-click-adventure-style wild goose chase.