Hostile Territories started life as an experiment with the Second Conflict source code early in 2004. After realising that Second Conflict was too complex and time consuming for casual gamers, the development team began work on a prototype version of a game that used the Second Conflict source code, but replaced the 2D map and complicated fleet commands with a simpler system that was more familiar to players with experience in other similar types of game (such as Planetarion or EmpireQuest).

For the first month of development the prototype was known simply as Second Conflict Lite and was intended as a stepping stone, that would allow new players to gain experience with most of the features of Second Conflict, before moving on to the full version with the advanced controls and map. However it soon became apparent that players found the Lite version more fun and interesting than the Full game, and did not want to switch over to the full version of Second Conflict.

At this point development of Second Conflict slowed whilst the team focused all of their effort on Second Conflict Lite, which was then renamed Hostile Territories. Hostile Territories left beta testing on Friday the 27th August 2004, and enjoyed modest success with its players.

Hostile Territories was taken offline in September 2005 after large amounts of data was lost when the server running the game was hacked in to. The game could not be put online again without significant work to restore the database, so the development team decided to start afresh.

The source code and a backup of the old Hostile Territories database were given to a 3rd party who were intent on attempting to restore the original game in 2006. This restored version of Hostile Territories has been running ever since.