According to this, Ninja Theory is not developing a Heavenly Sword sequel, and is instead creating a new IP for 360 and PS3. The game is already signed to a publisher.
The UK developer is also considering creating a CGI movie to stand alongside the new title.
"We're certainly targeting a triple-A blockbuster, with two and a half years in production – a big game that builds on our core strengths of story-telling, cinematics and combat. But we're actually looking at something in addition to that – we're considering opportunities in creating a CGI movie using the game engine alongside the game itself," said studio boss Nina Kristensen.
The Heavenly Sword IP is owned by Sony: there's no word as yet as to whether or not a sequel will be released.