I mean, I can appreciate they're going for a different art style but ew.
Coincedence? I think not.
It was a half-coincidence that Sega named their project the same as ours, Mr. Needlemouse was Sonic's original name, but nobody was using it. It only made sense to call a Sonic-inspired project Needlemouse. We had planned to announce it Wednesday night, but woke up to Sega's announcement, which is the weirdest situation imaginable. I mean, it was even the same day!
First, the domain was registered and the website went live in late August, long before anyone knew about Sega's game. You can go ahead and check by looking up the WHOIS information or maybe Archive.org. It was pure, insane coincidence.
Secondly, It's not intended to be a Sonic 1 reboot, just Jono and Matt's attempt to take the classic gameplay mechanics and put them in a 3D engine (2.5D, think Shadow Complex).
Finally there is quite a bit completed on this project, just nothing we've shown publicly. The game is playable at this stage, but definitely bug ridden and in need of testing. In a short while we intend to release little playable chunks that let us get feedback from the community before releasing the full game - for free of course.
Not to mention the just plain bad and inappropriate typeface choice (and the fact that the bottom text of their website will overlap the image if the browser window isn't large enough). I realize this project is in it's infancy, but these people are in desperate need of a decent graphic designer.

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