So BioShock Infinite had a team of around 200, was in development hell for ~5 years, is estimated to have cost around $100 million to develop plus another ~$100 in marketing costs, has sold at least 4 million copies plus DLC, and I'm sure will continue to do well during Steam sales and other events along those lines. The BioShock franchise has generated over half a billion dollars in retail revenue, won acclaim across the board, and showed few signs of slowing down in terms of either sales or recognition. But BioShock 2, although still profitable, sold less than the 5 million expected, and Infinite - a much more ambitious, and also troubled, title - has also sold less than that. Somehow, a team that seems very talented, that has generated significant revenue over the years, that doesn't even seem particularly large or unwieldy, and that was working with a critically and commercially rich franchise could not thrive in this environment, with this business model, making these particular games.
What happened? What's wrong with the environment, what was wrong with the business model? Was it really necessary to shut down the entire developer, or is it more that the other options (Ken Levine forms a small team, BioShock brand given to another team) were just that much more attractive? I mean, regardless of the answer to that latter question, it is revealing that the path of least resistance lead to a place where Irrational Games would no longer exist. It makes sense in retrospect, but at the same time, that this company of all companies had to go says so much about AAA development today.
Good luck to the many, many people who suddenly find themselves jobless. I hope BioShock is in good hands, and I'm also looking forward to seeing what Ken Levine and his team come up with. I'm sure Levine played a role in this decision, but I wouldn't blame him for this happening, either.