The game is set in the same narrative universe as PUBG: Battlegrounds, though set several centuries in its future. The Callisto Protocol is set in the PUBG: Battlegrounds universe, taking place in 2320 at a prison colony called Black Iron, operated by the United Jupiter Company, and located on Jupiter's moon Callisto. The player takes the role of a prisoner held at Black Iron, finding themselves in the midst of an alien invasion that appears to have been engineered by the prison's warden. The origins of The Callisto Protocol began with the formation of Striking Distance as a studio within PUBG Corporation in June 2019, helmed by Glen Schofield, who had previously co-created the Dead Space series at Visceral Games. Schofield said that when he met with PUBG Corporation where they explained their goal to expand the PUBG narrative, he already had the concept for The Callisto Protocol in mind and presented that to them and worked with them to fit his idea into their universe. The moon has been theorized to have a subsurface ocean of water, which Schofield believed could offer a mystery to tie into the game. Among others working on the game include Steve Papoutsis, who also co-developed the Dead Space series and led the series following Schofield's departure from Visceral; Scott Whitney, a designer on the Dead Space series; and Christopher Stone, the animation director for the former series. Notably, the game appears to include the same type of diegetic interface that Dead Space had used by a holographic indicator on the back of the prisoner's neck that indicating their health status and other attributes to the player. Schofield said that the comparisons to Dead Space reflect on his style of game, and while he still wanted to create something different, the allusions and inspiration from Dead Space fell out naturally from his creative approach. The Callisto Protocol is being designed for the newer home game consoles, the PlayStation 5 and the Xbox Series X and Series S, in addition to other platforms.
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