We are in our Alpha phase right now.
 
We are currently going through all of our previously created areas and revising anything that we think needs more work - both art and design.
 
Programming is nearing feature complete. We are tracking to be feature complete in a couple of weeks. This means that we are feature locked and most of the programming team will be diverted into bug fixing, feature polish, demos, etc.
 
Narrative will have a full pass done in a few weeks, as well. We are almost completely finished with the first pass on our crit path narrative.
 
Audio and VFX are still a ways off and won't be finished until July or August. They come onto the project later than the other teams because they require that content exists in a locked down form before they can do their work.
 
Character Art is working on creature variants, armor variants, and other miscellaneous items. Soon they will be adding in unique armors and weapons. Also, they will be creating head and hair variants in the next few weeks.
 
Animation is finishing up the last remaining A priority tasks and is moving on to some of our B priority animations (special attacks and whatnot).
 
UI/Concept Art has most of the UI in at an Alpha level. Kaz is finishing up things like Scripted Interaction slides and special UI screens. Also, he has a ton of portraits and areas to paint in the near future.
 
Production is figuring out project finalization, localization, Kickstarter rewards, convention plans, expansion planning, and a ton of other small things.

At E3, the team will be showing Pillars of Eternity at the Paradox booth behind closed doors. To avoid spoiling what we will be showing, we will be saving these moments until you get to play it. Because we want to include you in the experience, we will be taking photos at the booth, and in a future update we will be sharing more screenshots from the demo.

This game looks exactly like Baldur's Gate, from the slanted isometric view to the green and red circles around characters' feet. Hell, even the cursor seems straight out of the Infinity Engine.
 
But without the trappings of D&D, the folks at Obsidian were able to create their own lore, ditching the liches and half-orcs for a world full of enemy species with names like Glanfathan and Skuldr. Someone had a lot of fun coming up with this stuff.
 
 
There are eleven character classes. Any character can equip any item, but some classes will handle those items better than others.
 
Combat feels a lot like Baldur's Gate, too. It's real-time, but you can pause whenever you'd like to take a breather and give commands to your party. One big difference: instead of D&D-style "turns," characters have turn gauges that charge up in real time, not unlike the ATB system in Final Fantasy.
 
Also, you can't just rest after every battle like you could in the old Infinity games—in Pillars, you can either rest in an inn, or rest outside with camping supplies, which are limited based on the difficulty you choose.
"We don't want the player to rest after every combat," said producer Adam Brennecke. "We want the player to think a bit more."
 
 
As the game starts, your player-character is on a caravan to something called the Gilded Vale. Your guy or gal falls sick, and the caravan has to stop for the night. Things do not go as expected.
 
 
I won't spoil everything that happens in the demo, but the folks at Obsidian like talking about how encounters will have multiple solutions, both on a macro and micro level. At one point, for example, you're approached by a sickly enemy, and you can decide between killing him, trying to talk him out of fighting, feeding him, and other options. In the bigger-picture, the first dungeon lets you decide whether to solve a giant floor puzzle or find an alternative route.
 
 
As you interact with people in the world of Pillars, you can develop a reputation for yourself. It goes way beyond good and evil—we saw a dialogue tree in which the PC could increase traits like Honest, Diplomatic, Passionate, and Rational. Presumably some characters will treat you differently depending on how the world perceives you.
 
 
They're still targeting late 2014 for release. I asked Brennecke if he was concerned about launching close to Dragon Age: Inquisition, the big-budget BioWare RPG that's out in October. He said he wasn't worried—different audiences. Though the first Dragon Age felt in some ways like a new Baldur's Gate, BioWare's games have evolved in a totally different direction. Pillars is going back to those BG-style roots.
 
I also asked why the camera was so close up on the characters in the demo, and he showed us that you can zoom in and out, which is one of those killer, underrated features that will make this game much more convenient than any Infinity Engine RPG.
 
 
In the demo, we got to see one of the coolest unique features Pillars has to offer: illustrated text adventures. See, instead of CGI cut-scenes, Pillars breaks up the questing and dungeon-exploring with interstitial text sequences that could be straight out of a Choose-Your-Own-Adventure book. You get to make tough choices as you read through them. These scenes are really cool, and if they're written well, they'll be a game highlight.

For people who are concerned about spoilers, the Backer Beta will feature a number of areas near the middle of the game that do not have strong connections (if any) to the critical path.  In addition to the characters you create, we are also likely to feature a roster of pre-made characters who are not companions.  We don't have any interest in using the Backer Beta to give out story info.  We'd much rather have people play it and throttle the mechanics, UI, etc. so we can make fixes and adjustments.