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Do you want to know why Runic Games is working on their new title hob instead of Torchlight 3? Well, because they're burned out on Torchlight and they don't want to compete with Diablo 3 right now... and understandably so.
IGN managed to get in word with Runic Games' president Marsh Lefler, who explained to them exactly why they decided not to do a follow-up to Torchlight 2 at the moment...
We’re just burnt out, […] Let’s admit it, Diablo 3 is killing it right now. Diablo 3 is a really fun game. Not that Torchlight 2 isn’t a fun game, it is, but it’s just different. For us to try to compete with Diablo 3? We weren’t trying to compete before.
It is true that the landscape of action-RPGs has changed drastically since 2012, back when Diablo 3 first launched and back when Torchlight 2 looked like the savior for the isometric ARPG sub-genre.
Three years ago Diablo 3 was mired in the controversy of always-on DRM and a very heavily criticized real-money auction house. The game has undergone some massive changes since then, with Blizzard putting a lot of time and effort into repairing the relationship with the community and focusing more on replayability as opposed to scrapping up a percentage of sales through the RMAH.
At this juncture, Diablo 3 now has tons of new content, lots of new balance patches and plenty of upgrades that managed to win over a lot of gamers and win back fans. The additional seasonal content has managed to make Diablo 3 a replayable title that has the game at the top of the crop of action-RPGs for a lot of core fans.
It's understandable that after Blizzard managed to make Diablo 3 not suck that it became a serious force to be reckoned with. Attempting to make a full-fledged ARPG at this point means that most gamers are going to directly compare any new game in the genre with the current iteration of Diablo 3... and that includes Torchlight.
It's understandable from Runic's perspective that they don't want to have to directly compete with Blizzard right now and would rather focus on something entirely different.
According to the IGN article Lefler mentioned that the team just needed a “little break” and needed to try something different for a change.
It's likely that after Runic gets their kicks in with Hob they'll be able to return to Torchlight at some point in the future with renewed vigor and fresh ideas.
This is also one of the highlights of independent gaming – developers don't have to make sequels if they don't feel they need to. It's the opposite of the AAA sector where annual releases and tight deadlines keep some games coming out time and time over again even when they aren't ready.
In all likelihood when Runic does release a new Torchlight the gaming community and fans of the series will be thoroughly excited for it.