Larian partially created Baldur's Gate 4 - some elements were playable

Larian Studios decided against developing Baldur's Gate 4 due to conflicts with the owners of D&D. However, prior to this decision, the studio had already created a working prototype of the game.

Baldur's Gate 4 was presented to Larian immediately after the completion of the third installment. The decision to abandon the continuation came only after the studio had begun working on it. Larian's head, Swen Vincke, stated during an interview ahead of the first anniversary of Baldur's Gate 3 that the prototype was "partially playable in different ways."

"So when something becomes super successful, obviously everyone asks you: 'When are you going to make the next one?' And when you, as a developer, emerge from that tiny, wretched cave you’ve been in for hours finishing your project, you become vulnerable. ... You tend to do the obvious thing: create a DLC or a sequel, because that's the easiest route," said Vincke.

As a result, Larian began developing a sequel, initially envisioned as an expansion:

"We have the engine, we have everything— all we need to do is add more levels or just create a few new stories. How hard can that be?"

The progress was rapid since "the production machine was still warm":

"Oh yes, that sounds like a really good idea. Let's create BG4. Everything we did for this, we can just move over; people will love it."

But for a studio that had developed its own Divinity games for decades, it seemed questionable to invest several more years in someone else's setting:

"I mean, we’d probably have to rework this 10 times. And do we really want to do that for the next three years? … We need to seek out how we can do things that excite us."

When Vincke discussed this with the team, the initial enthusiasm for Baldur's Gate 4 quickly waned. The company is now working on two new games, details of which are not yet available.

Source: PC Gamer