There was a piece of concept art of Ethel marked from 2018, probably around Torna was either in development or finished. I know most of us in here assume as much but that likely means the next Xenoblade has already seen some ideas/art/what-have-you laid out for it. Granted there's always the chance that's not true, but their dev cycle seems pretty consistent.
Takahashi has stated that for a short period of time there was technically three games in development at the same time, with Torna alongside Xenoblade DE and Xenoblade 3. Maybe we could try and make a timeline for the development of the Xenoblade games since Xenoblade 2's release to see how they could potentially be going from here. This is all speculation on my part.
April 2017: Small team starts pre-production of Torna while the main team is hard at work at the base game.
December 2017: Xenoblade 2 wraps up development and most of the team moves over to work on Torna.
April 2018: Takahashi and Monolith has a meeting with Nintendo and proposes that they remaster Xenoblade 1 for the Switch and proposes their plans for Xenoblade 3. As well as the plans for the action RPG, which gets greenlit alongside the 2 Xenoblade projects.
May 2018: Pre-production is started for Xenoblade 3 and Xenoblade DE. From May to September, 3 projects are being worked on at the same time
September 2018: Torna finishes development and the team joins pre-production of Xenoblade DE and Xenoblade 3. 3 teams are set up, one to work exclusivly on Xenoblade 3, one to work on Xenoblade DE, and one to support the development of both with assets that are going to be shared between Xenoblade 3 and Xenoblade DE.
October 2018: Takahashi and Monolith Soft puts out a recruitment for the Xenoblade series and the next Xenoblade game. They specifically want programers and technical artists as full-scale development is being prepeared, while the artists they hire for are more for the future of the series (as pre-production has already been mostly wrapped up by now. Some staff from Divison 2 of Monolith move over to Division 1 and some from Division 1 to Division 2, the core team is being set up and awaiting the new recruits. This is done now to establish the core teams for both Divison 1 and Division 2 moving forward with the next projects, giving the Division 2 team 4 years to work on TOTK full-sclae.
January 2019: Full-scale development of Xenoblade 3 and Xenoblade DE start. The game is planned to release in December 2021.
April 2019: New recruits have been fully assembled into Divison 1 and move along with full-scale development.b Monolith Soft puts out a recruit for Division 2's Zelda team (in March 27th, so essentially April) and plans to integrate new recruits in Division 2 by October 2019. The plan for TOTK is to release it in 2022 and have
March 2020: It becomes appearent that development of games are going to slow down in the shift to remote work from home
May 2020: Xenoblade DE meets its original planned release date but takes a bit of a hit durning its polishing phase. The Xenoblade DE team and Divison 1 support team moves to work on Xenoblade 3 fully.
August 2021: Insiders familiar with Xenoblade 3 states that the game is going to have returning characters and aims to have many characters and assets on screen at once. The game enters a phase of being heavily optimized to run well on the Switch, the development of the game happens at a bit of a slower pace. The game is delayed 1 year from its original Devember 2021 release date, coming out December 2022 at its latest. The game is still mostly complete by Devember 2021 but a lot of work has to go into polishing the game.
October 2021: Pre-production for Future Redeemed is started.
December 2021: The game is locked into a September 2022 release as progress on optimization and polish is smoothing out.
Febuary 2022: The game is revealed with a September 2022 release date, slated to come out in 7 months.
March 2022: Behind the scenes at Nintendo it becomes appearent that Splatoon 3 will not be optimized enough for its summer 2022 release, which was initially announced as a summer 2022 release depending on how much progress was being made on the game, making it able to be released anywhere from May to July. Maybe originally slated for June 2023, the game gets a 3 month delay to optimize and polish up the game further. Seeing how Monolith Soft's work on Xenoblade 3 has progressed at a good pace, Monolith gets asked if they're able to get the game out earlier than announced, and the decision is made to have the game come out right before august to space out Splatoon 3 and Xenoblade 3's releases as much as they can.
April 2022: 2 months after the September 2022 release date announcement, we learn that they've changed the release date to July 2022. So we can assume that it was a decision that was made in March. The game enters final optimizations and polish, half of Division 1 moves to full production of Future Redeemed and the other half polishes up the main game for release.
August 2022: Development of Xenoblade 3's main game wraps up and most of the other half of Divisoon 1 joins Future Redeemed's development. After the completion of Xenoblade 3 18 contracted Monolith Soft employees who signed up for Xenoblade 3 leave Monolith and the people who stay in Division 1 will be a part of the next Xenoblade game. Here comes the speculation on how the team in Division 1 has been divided, and what they've been working on since then. My guess is 40% moved to supporting Future Redeemed's development, and the other 40% has moved to supporting the action RPG team. While a small team under Takahashi's lead is setting up plans for the next Xenoblade game. Think the freelance artist that joined from September 2022 to January 2023 comes from a shift in development phase for the action RPG after Xenoblade 3 finished development and more people joined the team to support it.
October 2022: Plans are being drawn up for the next Xenoblade game by Takahashi's team while work on the action game and Future Redeemed continues. Perhaps even Xenoblade X DE has been pitched.
January 2023: Future Redeemed enters final polish for release.
April 2023: Future Redeemed wraps up development and core teams start being established for the next projects. A recruitment is put out for a UI artist for the action game, which is aimed to release September 2024 for the Switch 2. Pre-production for Xenoblade X2 and Xenoblade X DE start and only needs a smaller core team until full-scale production starts.
October 2023: UI artist is intergrated into the team at their latest and is planned to work on the action game up until April 2024/when the game enters polishing phase. Maybe in October 2023 Monolith will put out a recruitment again for the next Xenoblade project.
January 2024: Full-scale production for Xenoblade X2 and Xenoblade X DE start. Some staff from Division 1 that has been helping out on the action RPG move over to Takahashi's Xenoblade teams. Xenoblade X DE is planned to release in April 2025 (lining up with X's 10 year anniversary), and Xenoblade X2 December 2026/April 2027.
April 2024: Action RPG enters polishing phase and more division 1 members join the Xenoblade team's full-scale development.