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Deathloop has the player in the role of Colt, an assassin who is stuck in a time loop, waking up on a beach at the island of Blackreef. The other residents of Blackreef, a former army base where strange experiments had once been held, have invested in the island and have gathered for this night to hold a party that seemingly lasts forever, as at the end of each night, the island resets to the start of the party in that time loop. Because of this reset, the partygoers pay no heed to their actions or deeds since they wake up at the start of the loop with no memories or effects of the previous loop. While Colt is part of this loop, he retains memories from each loop, learning the behaviors and patterns of the partygoers with each loop.
Colt has been tasked to take out eight targets across the island before midnight, as leaving even one alive will cause the time loop to reset and undo his work. Further, should Colt die before taking out the eight targets, he will wake back up at the start of the loop. Unlike The Legend of Zelda: Majora's Mask, another game with a time loop that runs in real time, the time loop in Deathloop is not strictly timed and is aimed to give players more time and freedom to take out these eight targets in one loop. The player uses a combination of stealth, parkour, attack skills,
gadgets and powers as in Arkane's previous Dishonored and Prey games to move about the game world, avoid or take out guards, and learn the patterns of Colt's targets to figure out the right order to eliminate these using guns, melee attacks, or other environmental means.
The game features a multiplayer aspect in which the player can alternatively take the role of Julianna, an agent tasked to protect the time loop and take out Colt. When the player takes this role, they will enter a random player's game and may interfere with their play. The multiplayer portion is optional and players can prevent others from taking on the role of Julianna in their game, instead leaving this to a computer-controlled opponent to try to stop Colt.