After a job posting on CD Projekt Red's website referenced a new studio in Krakow, Poland, Managing Director Adam Badowski commented confirming the expansion. Opening in July, a twenty person CD Projekt RED offshoot team will begin work on a "smaller" scale 20-hour long premium title. This is part of a strategy outlined earlier this year where CD Projekt RED will develop two of these smaller projects in addition to The Witcher 3 and Cyberpunk 2077.
Here's the official statement by Adam Badowski, as recieved by Gamasutra:
"This July we are opening an office in Krakow. As we informed in our strategy outlook some time ago, aside from The Witcher 3: Wild Hunt and Cyberpunk 2077, the studio aims to develop two smaller (approximately 20h of gameplay) premium quality titles. Consisting of 20 people, the core team in Krakow will be responsible for developing one of these games."
During E3 we confirmed with CD Projekt RED that The Witcher 3 would contain about 100 hours of gameplay, split 50/50% between main-quest and side content. A 20-hour "small" game for that studio seems in line with their view of scale. For comparison, Double Fine's Massive Chalice will be running a highly experienced team of 12 people for about a year to get that game out. In other words, this Krakow studio is going to have to be stacked with talent to create whatever CD Projekt RED has in mind.
It's unlikely we'll be hearing anything more about the game or studio until they really get into the thick of development. I'd say, for a small game with the resources CD Projekt Red has at their disposal, we could hear something anywhere between the E3s of 2014 and 2015, but even that could be highly optimistic! Oh well, the more CD Projekt RED out there, the better.