The first mention of album 3 came out in early March 2016 on vlog 9, when Sparkles* stated he was working on new ideas on the third album, even before Modern Synthesis was released. He also stated then that it will come out closer to Modern Synthesis than Modern Synthesis was to All The Lights In The Sky.
Then next nod to it was mentioned in early January 2017 on vlog 31, when Sparkles* confirmed that they were writing a new Area 11 Album. He also mentioned in a reddit comment that one of his New Year's Resolutions was to complete the Album, giving it an original 2017 release date.
Some content was actually released late April (although the footage was recorded early March) on vlog 39. Sparkles* showed about 2 seconds of one demo, recorded by a microphone through headphones at max volume, so the quality was not good. He talked about he was coordinating with the band on these demos online, but once he got back to London, they would begin working on it full force.
On June 8, 2017, an interview with Area 11 was released (source), where they talked a bit about Album 3. Kogie responded, when asked about if the new album could be R.E.M. inspired "No, no, no. Not “could be”. It is". They also stated that they're at the stage of "collating and whittling down our demos". They did state though that "We’re not setting ourselves any hard deadlines". Sparkles* also mentioned he wanted to get a producer on the new album.
On July 27, 2017, Sparkles* confirmed during a livestream that Album 3 will be the next Area 11 release (no EP or singles in-between).official discord stating that the new album would likely be about performance as it relates to performers and their audience, and how we now consider other people to be our audience. However, he also confirmed that it would be completely unrelated to Digital Haunt, as he was "sleeping DH for the next record cycle".
On March 17th, 2018, Sparkles* stated on a live-stream that the demos had been sent off to the label company and "they sound fucking amazing." They hope to start official recording soon.
On April 13th 2018, Sparkles* stated on a live-stream that the had "a change in circumstances in regards to Album 3, which may sound like bad news right now, but will probably be very good news." He wrote that Album 3 does exist, and it will happen, but there might be "a bunch of stuff before Album 3." This was proven when the All Your Friends/New Magiks single was released on July 27th, 2018.