Polygon posted a great article today about the Alan Wake 2 prototype demo Remedy was shopping around back in 2010, including a video of the prototype itself:

Interesting to see how a lot of the ideas they were playing with ended up in American Nightmare. I really enjoyed American Nightmare, but man, even though it's a prototype this feels much more like the next "real" Alan Wake thing.

Seriously, the pitch of Mr. Scratch taking other stories and making them real in order to fight Wake sounds fucking awesome. Opens up a ton of potential for crazy. Hopefully after Quantum Break Remedy'll have a chance to get back to it.

I wouldn't hold out too much hope for Alan Wake 2...

article and alan wake 2 sounds really cool. but i also totally understand why microsoft didnt want to do another one right now. microsoft spendt alot of money on it and was in development for quite some time. but remedy is good at new ips. so happy they still kept them working atleast^.

but one thing i didnt know was that remedy completely owned the alan wake ip. so chances of an alan wake 2 is alot bigger, even if its not published by microsoft. hopefully someone will pick it up after Quantum Break

I fucking really hope that they can get back to Alan Wake right after Quantum Break. I already wanted a full on sequel before but seeing the kind of crazy shit they wanted to do is making me extra bummed that they had to move on.

Sam Lake has too much love that character and that world to not go back to it at some point.

Considering the title of the article is, "Introducing the Alan Wake 2 You Will Never Play" I dont think anyone is holding out hope.

That was addressed to the OP

Remedy is in a weird position. They're a one game at a time studio, so it takes them a long time to make a game. If Quantum Break is a hit, I can easily see Microsoft quickly green lighting a sequel. That would put Alan Wake 2 off indefinitely. If QB isn't a hit, they are in a tough spot of having two under performing games in a row and another developer might not want to take a chance on Alan Wake 2. I love Remedy and hope that everything works out for them. I would absolutely love Alan Wake 2.

That would of been clear if you replied to him.

@williamhenry: Is selling 3.2 million really that bad though? I don't know who it is, but the person who projected that Alan Wake will sell in the likes of Halo and Call of Duty is out of his mind.

Man, this just reminded me that I really liked Alan Wake when I played it.

Alan Wake was probably my favourite game of the last gen. I'm well aware of its shortcomings - specifically in the lack of gameplay variety - but I absolutely fell in love with the world, the score, the characters, everything. I can't remember being so on-board with something that I took the time to seek out everything on the periphery of the game - the scripts, the collectors edition, the in-fiction band's amazing songs - the Bright Falls webisodes were particularly awesome:

Regarding the viability of Alan Wake 2, from the Polygon article:

When Remedy first told me it was going to let me look at the prototype, my first thought was that Alan Wake 2 was completely dead.

But that's not why Lake and the rest of the developers at Remedy were so comfortable releasing it.

"The thing that made this idea of releasing this prototype demo OK is that it is very much on a high level," Lake said. "There are no spoilers in it. That being said, I do hope we get an opportunity to work on Alan Wake 2. I want to do more Wake at some point."

I really hope it all comes together at some point. Remedy can take all the time they need. They have a lifelong fan in me!

Sure Alan Wake had its problems (and the side adventure also) but I really did enjoy my time with the game and have gone through it several times now that I think about it. Anyhow I'd have liked to have seen a second instalment of Mr Wake on the current generation but alas it seems that such a fate for Mr Wake was not to be - unless of course he writes himself into it...

Kinda awesome, yet also a little sad to see this. It seems they've taken the messing with fiction stuff and turned it into time manipulation for Quantum Break. I have really high hopes for that game, and if it comes anywhere close to being as enjoyable as Alan Wake that'll make the loss of this sequel a little easier.

I wish Remedy could get a break. They make interesting and very good games, they deserve something better. Alan Wakes's atmosphere was something special, and I hope they get to make a follow up, I've been thinking about playing it again. I'm anticipating Quantum Break but I'm worried the exclusivity is a barrier, but thankfully they are still making games.

AW is coming, no way they don't follow up on that story. It could take many years, but I don't doubt it will happen. Anyways, that video gets me super hyped for Quantum Break, that rewrite reality scene and the destruction that came from it look so awesome. QB engine + Alan Wake would be dream come true.

Some stuff made it into AW: American Nightmare, which was cool. The enemy interactions looked pretty awesome too.