Bethesda formally announced their title in early 2011, which revealed a change of the player's main character and of gameplay to a more open world game.

In Prey, an alien spacecraft called the Sphere appears over the southwestern portion of the United States and starts abducting humans and other objects as part of its cycle to sustain its resource supply and its organic crew.

One of those abducted is Domasi "Tommy" Tawodi who, in part due to his spirit guide from his Native American background, is able to navigate the Sphere, defeat hostile alien forces, and succeed in freeing captive humans and other lifeforms from the intelligence that controls it, before returning to earth.

The game was considered successful; it had received Metacritic aggregate scores of 83 and 79 for the Xbox 360 and Microsoft Windows versions, respectively,[4] and by October 2006, over one million units had been sold according to 3D Realms' Scott Miller.

[6] In June 2007, Miller co-founded a brand-management organization Radar Group, which was designed to help fledgling development studios bring their games to publishers and distributors.

[8][9] According to Human Head's associate producer Matt Bisenius, all the previous work on the game up to its acquisition by ZeniMax/Bethesda was "bouncing ideas around" rather than any detailed development, believing 3D Realms/Radar Group had announced this sequel too early.

"[12] According to Pete Hines, the vice president of public relations and marketing at Bethesda, the current version of the game is what the developers wanted to make and not what has been announced before by the Radar Group.

[13][non-primary source needed] Human Head shared footage of their version of Prey 2 with the Strong National Museum of Play in March 2018.

Norm Nazaroff of Human Head believed they had added much more content and technical innovations to the title, as to make it "one of the best looking games of the [then-current] console generation".

[15] Another Human Head employee, Jason Blair, who had worked on narrative elements for Prey 2, said that reasons for ending development were "political" and "petty".

[21] Further concerns were raised when Bethesda removed Prey 2 from their website in August 2012, stating to Eurogamer that for the present they need to focus the site on upcoming titles.

[22] Kotaku reported in May 2013 that development of Prey 2 had moved to the Austin, Texas division of Arkane Studios, who at the time were completing their work on Dishonored.

[24] However, a week after this, several internal emails from Arkane revealed that they had been approved to work on Prey 2, which they wanted to mold as a spiritual successor to System Shock.

As claimed by IGN, Bethesda had been pleased by progress up through the Electronic Entertainment Expo 2011 showing in June, and agreed to give Human Head an additional six months or more on the project to complete the game and still make the planned 2012 release; however, this extension was not written into their contract.

Bethesda pushed harder on milestones and requesting additional features for Prey 2 that would normally have been given appropriate time and monetized in payment to Human Head in the extension contract language if it were in writing.

As Human Head was contractually only allowed to work on Prey 2, they had to quietly support other games like BioShock Infinite and Defiance as to pay their mounting bills.

As a result, Bethesda indefinitely blacklisted Kotaku in October 2015, denying the site any pre-release review copies or access to their spokesmen or developers at game conference events or via interview.