It was conceptualised in one of the Blackbird's internal game jam sessions after the studio completed the development of Homeworld: Deserts of Kharak (2016). Hardspace: Shipbreaker is developed by Canadian studio Blackbird Interactive. When they die at the worksite, Lynx, which also owns the character's DNA sequence, can reconstitute the player and return them to work. After signing the contracts, the player character becomes the official property of Lynx. The player character, who is desperate to leave Earth and relocate to other colonies, signed an exploitative contract with Lynx Corporation to become one of its shipbreakers, who are responsible for salvaging abandoned spacecraft in search of useful materials.
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In the distant future, humanity has colonised the Solar System, and the Earth is plagued with various issues, such as civil unrest, food shortages, and climate change. Weekly competitive challenges were added into the game in August 2020. By completing work orders, players earn certification ranks, which allows them to unlock new tools and access larger and more challenging missions. The pod is also where players select the ships.
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With every successful operation, players are given Lynx Tokens, which can be used to upgrade and repair the player's tools at the personal habitation pod. All missions were timed, though the studio subsequently introduced an Open Shift mode that removes the time restraint. As players explore the ship, they also need to manage their resources such as oxygen and thruster fuel. Once it is pulled out from its coolant casing, players need to bring it to the deposit location as quickly as possible or else it will melt down and trigger a huge explosion. One of the most valuable items in the game is the ship reactor. They may also trigger an uncontrolled decompression, causing the player, alongside all objects and items in a room, to be flushed out from the ship. For instance, players may accidentally cut through electrical wires or coolant pipes, resulting in a huge explosion. The ships featured in the game are procedurally generated, and each of them features potential hazards that can kill the player. A scanner can also be used to identify possible hazards. They can also use a laser cutter to incise key structure or sever large objects. They can use a tether tool to pull themselves towards large objects or pick up small items.
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The player is equipped with various gadgets. The player must salvage useful materials in abandoned spaceships in exchange for credits so as to pay off the massive debt the player character owes to Lynx. In the game, the player assumes control of a shipbreaker employed by Lynx Corporation. Hardspace: Shipbreaker is a simulation game played from a first-person perspective.