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Not that it should be a surprise to anyone, but is this the first time Valve has openly admitted that Episode 3 is officially cancelled?
No. They publicly stated the cancellation of episode 3 years ago when it was still relevant, and is one of the reasons I was always confused about every single rumor that HL3 was going to be a thing; they never announced a HL3 and they already said Episode 3 wasn't coming out. Where the heck did the HL3 rumors come from?
The cliffhanger ending of E2 would do it.