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Easter Egg in Arkham Asylum
Arkham City first receives mention in Batman: Arkham Asylum in a hidden Easter egg. In fact, the secret was so well hidden that it was not known about until the developers at Rocksteady revealed it just after showing the initial teasers for Batman: Arkham City. The plans for Arkham City can be found in a hidden room inside Warden Sharp's office. After entering the office, bomb the far left wall 3 times with explosive gel to reveal a hidden room which is not visible in detective mode. Inside is Sharp's private office with plans on the wall detailing the proposed Arkham City. Additionally, the blueprints for the site have the stamp of approval from city hall which indicates that Sharp had been planning the creation of this area for sometime prior to the events of the first game.
After the events of Batman: Arkham Asylum, Quincy Sharp, the former warden, wins his mayoral campaign when he takes complete credit for stopping the Joker. After winning in a landslide victory, Sharp implements plans to build a new prison after the fire at Blackgate and the havoc caused at Arkham. The result is Arkham City, a portion of the Gotham slums that is walled off and where prisoners from both the asylum and Blackgate can be housed. The location is not the typical prison in that there are no cells and the inmates are allowed to freely roam the environment. In fact, the only rule is to not attempt to escape as the penalty is death. Helicopters and SWAT officers patrol the borders to maintain the lock down on the area. Of course the freedom enjoyed by the prisoners inside leads to complete and total anarchy within the walls of the prison. Given some of the information found about Sharp in B:AA it stands to reason that this is intentional as Sharp seems to want the prisoners within to wipe each other out.
Rocksteady has commented that the outdoor areas of Arkham City will comprise approximately 80% of the gameplay environments for Batman: Arkham City with the remaining 20% being indoor environments. Given the size of Arkham City, the game is taking on a more open world style of gameplay. As a result traversal will be accomplished by gliding and grappling across. Moreover, the glide physics for Batman have been changed in the next game so that a player can continually glide over long distances in a fashion similar to Just Cause 2. Players can also grapple onto passing Helicopters.
Given the open world nature of the game the environment also aids in mission structuring. As an example, players will find billboards which have the green Riddler paint on them with a marked frequency. Batman can tune to these frequencies and then find a Riddler puzzle to solve. Another example of this are payphones which Victor Zsasz will call threatening the life of the person who answers. The player can then choose to ignore it or attempt to stop Zsasz.
Arkham City at the start of the game will be in the midst of a control conflict between the Joker and Two-Face. It is this conflict that creates much of the initial anarchy that the player will have to mitigate at the start of the game. At this time those are the two major factions that will control the city. Though other villains and their associated gang elements will undoubtedly have some role to play, but they have yet to be announced or specified.