It seems like every time we hear about a new title, the first thing we hear is an announcement about what engine or dev tools its developers will use. This time, Sierra has licensed the BigWorld Suite, parts of which are also used in Cheyenne Mountain Entertainment's Stargate Worlds and John Romero's forthcoming MMO project.
The announcement was made by BigWorld Technologies, not Sierra, and it didn't reveal much about the nature of the game, except that it it will be (according to Gamasutra) "targeting a mass-market audience." King's Quest Online? Probably not, but if only! If you want to know more about BigWorld, Ten Ton Hammer did a great interview with one of the guys behind it earlier this year.
Oh, and just so you know; Sierra is/was owned by Vivendi Games, and so is (like Blizzard) now part of the epic corporate monstrosity known as Activision Blizzard. All your studio are belong to us.