That's right Ana, here's the pressrelease talking about TLJ, called "Dreamfall Chapters"
Durham, USA – March 1, 2007 – Funcom announces that the Norwegian Film Fund has awarded Funcom a grant which will partially finance research and initial development of ‘Dreamfall Chapters’. The grant enables Funcom to establish a core technology team which will research online-only delivery methods of episodic content, as well as lay the foundation for a later pre-production phase of ‘Dreamfall Chapters’.
and very important
Each new installment of ‘Dreamfall Chapters’ will initially be delivered as online-only content, but there may be retail releases with combined chapters, both for console and PC, at a later stage.
Funcom will not release any additional information about ‘Dreamfall Chapters’ for the time being.
and a bit about the story
ABOUT “DREAMFALL CHAPTERS” - ‘Dreamfall Chapters’ begins right where the critically acclaimed and award-winning ‘Dreamfall: The Longest Journey’ ended, continuing the epic saga of the twin worlds of science and magic in a brand new format. Through thrilling episodes, players will embark on an amazing and exciting journey through worlds both familiar and fresh to meet fascinating and surprising characters, explore beautiful locations, experience a deep and intriguing storyline – described by critics as one of the best stories ever written for a game – and enjoy uniquely varied modern adventure gameplay in a whole new way. And at the end of the road waits the greatest mystery of them all – one that will bring the groundbreaking saga to a surprising and stunning conclusion.
On the developer site there is just this press release and no further news, so hopefully the project is still on!