In "Dying For Pie", both Spongebob and Squidward are possessed by demonsThis is why Spongebob looks so different. And the two demons hate each other, hence why the one possessing Squidward kills Spongebob, presumably to get rid of the other demon.
- This seems to be supported with pamtri's new video, "Regular Show." It shows that Pops seems to have been possessed by... something (Santiago, possibly?) after a scene mimicking his death in the official series, and he also has the red and black eyes after he's apparently possessed.