My theory is that they originally came up with the idea for Fangus because EA were pushing for Stranger II, which they didn't want to do straight away. So they came up with something with a similar game-mechanic and could use the same engine. Then they decided that EA were a heap of turd-buckets and went to Majesco.
That said, I suspect it was OWI who broke off the deal with Majesco. If OWI really wanted to make the game and Majesco ended the contract they would just have found another publisher. But Lorne wanted to do something different.
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Spending as long as I do here, it's easy to forget that Oddworld has actual fans.
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