Penny Arcade Adventures hasn't seen a new release since Episode 2 in October 2008, and now it seems further game content won't be coming at all. Penny Arcade co-creator Mike Krahulik confirmed today that the downloadable series will be ending prematurely.
"There won't be an Episode 3," said Krahulik to Joystiq. "We're actually not making a third episode of the game."
"[The game's developer] Hothead has DeathSpank and they have a chance to do something really cool with it," noted Jerry Holkins, Penny Arcade co-creator. "And they need to have an opportunity to make it incredible. They definitely could've done both games. I think they could've made DeathSpank and Episode 3 but I think Episode 3 would've suffered. I mean, I know it would have suffered. So we'd rather not do it than do it half-assed and so we're going to finish that story but it's going to be on our website."
"Right now my focus is on trying to create an episodic story-based version of the remaining games,” Holkins explained. “It's going to be like a book that comes out. According to the traditional model of episodic fiction."

