I'd say it would be ready for release in about 2-4 years, and if they have to start development now, 5 years is okay too.
ESO 2 would not be "ESO more like regular TES". It would be "hey, ESO wasn't half so bad as an entry into the crowded genre, let's make it better."
I think there are a few areas where it can be quite different from ESO and really earn the "2" title.
1) More action oriented combat – no, not more TES like, still MMO. But something unique and fun and a bit more tactile than your standard MMO.
2) Complete open-world Tamriel and Oblivion pockets. From day 1. Every province has zones for all levels of players. Yes this means a slightly bigger world. YES, this means a more procedural map with grindy random enemies, BUT, that can work in an MMO. Yes, it can be gate-y where you have to do something to get the "pass" to enter through a gate into a zone, but the beginner and intermediate zones snake around hard zones and mountains and so forth. The main purpose of this isn't to achieve some master planned final realization of the open world Tamriel. The purpose is to let people really really role play. Your own race, your own reason for going to different provinces.
3) Skill customization. MMO balance is important, but I'd prefer a play style that let's you role play a skill set, and then it kind of auto-balances the stat combination. Difficult to pull off, but I like the idea of ESO 2 as its own thing and not a WoW clone.
4) Even better graphics
That's about it really.
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