The hugely successful Skylanders: Spyro's Adventure has gone on to sell millions of units, and the upcoming Skylanders Giants is expected to sell even more. But long before Toys For Bob's idea to use Spyro figurines as game save and data storage devices, the studio was working on a pre-alpha Spyro game that eventually lost out to Skylanders.
One of Swords reports that in the late 2000s the game that would eventually become Skylanders started out as The Lost Realm of Spyro's Kingdom. In this game, Spyro was to be a full-grown dragon and the king of Spyro's Kingdom. The player would be assigned quests by Spyro and receive help along the way from the purple dragon himself.
Skylanders' design producer, Michael Graham, says that the game was very close to moving ahead – Toys for Bob was ready to hit alpha in April or May of 2010 before the team realized they could make the game much, much bigger.
In One of Swords' interview with Graham, he runs through all the iterations the game went through to become Skylanders, and he also talks at length about the design of each character and their prototypes. The figurines pictured above were the first five Skylanders from the game's original pitch: Rock Dragon (who would later become Bash), Ghost Eater (Ghost Roaster), Fire Dragon (Spyro), Cyclops Snail, and Bomb Trailer (Boomer).
The full interview can be read here.