In 2014, studio co-founders Travis Baldree and Erich Schaefer left Runic Games, ultimately forming Double Damage Games and releasing Rebel Galaxy. This investment was targeted toward the development of the Torchlight MMO that the studio has previously presented. ĭuring Torchlight II 's development, Perfect World Entertainment invested US$8.4 million into Runic Games, gaining a majority control of the studio. Torchlight II represented a partial step toward the MMO, giving them the opportunity to expand and test multiplayer elements. On release of Torchlight, Runic's Max Schaefer asserted that it was a first step toward a planned Torchlight MMO. With only fourteen employees to start, Runic decided to stay closer to their roots and develop a single-player game without an online component so as to get a product out faster and then build upon that in the future this ultimately became Torchlight.

With Runic, the company wanted to 'finish what they started' with Mythos, but to redevelop all portions of the game, lore, and art for this title. Flagship had been developing Mythos, another action RPG but with significant massively multiplayer online (MMO) components. Runic was founded by several video game industry veterans with experience from Dungeon Crawlers like Diablo, Hellgate: London, and Fate, many of whom had been at Flagship Studios at the time of its closure in 2008. The Torchlight series was originally developed by Runic Games the first game, Torchlight, was a single-player only game released in 2009, and its sequel, Torchlight II, released in 2012, added in cooperative play between (up to) six players. With the change to Torchlight III, the game is expected to be more of a linear approach as from the first two Torchlight games, but will still support both offline and online play. Players with high-level items entering a dungeon with lower-level players would have their items temporarily weakened to the lower levels while in the dungeon. To balance players' overall abilities, the game would have used item-based experience levels rather than player-based levels. Players would have been able to party together to explore these dungeons. Initially, Torchlight III, as Torchlight Frontiers, had been a massively multiplayer online game, introducing large surface levels that allow players to join together to fight monsters that respawn over time, and travel between the game's primary dungeons, many of which are procedurally generated. From an isometric, top-down view, the player controls their character to move about the game's world, using hack and slash with a variety of weapons, magic spells, and skills to fight monsters, collect new items and treasure, and sell and buy items in a centralized town to improve their character's abilities. Torchlight III is a Dungeon crawler where the player controls a character in a high fantasy world.

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