It is a whole new game since it will not have the same story, the same designs or anything resembling the old game
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Now with the restrictions regarding anything with hypnosis related yes your right the story is going to change big time. But when I first made the comment that wasn't the issue at the time.
The story was going to be the same the start was just reworked because it didn't make sense for such a "SECRET" organization to be able to completely lock down a city with the numbers they showed later in the game from the previous version.
As for the mystical being no longer being secret, again city on lockdown as war in the streets later in the game and you gained peoples trust from the rich side of town way too easily if since that would have been their first time seeing magical creatures in the previous build. Besides the woods were FULL of mystical creatures, the Forrest was right next to the city so of course they SHOULDN'T have been unknown to the public with THAT close proximity.
Yes design of the character models changed but that was done with the intent to make it stand out more from the sea of other games that looked just like it.
Also like I said all the characters still acted the same, with the only exception being the half rock spirit girl who in all honesty didn't have much character except shy and likes to sing.
The new version of the game just simply set things up to make sense later when the stakes get higher.
Of course since the games NOW gonna have to be reworked because credit card companies are pressuring itch.io and other sites to not have hypnosis content but that's beside the point.