They probably didn't think it sold well enough and figured VV was better off working on a franchise with more of a future to them.
Activision merged Vicarious Visions into Blizzard in January 2021 (and there were rumors that this was the plan back when word first broke that Vicarious Visions was working on Blizzard's Diablo II Resurrected.) Tony Hawk 1+2 came out September 2020, and had not launched on the Switch platform until after VV was announced as moving into Blizzard, not until June 2021. (PS5 and Xbox Series versions also came out in March; those were of course hot platforms, but also the game was cross-buy, so it's unclear what expectation of sales those two platforms had? Switch however was undeniably a core platform target even though that version arrived late.)
...So, Sept to Jan, that's a little early to tell the legs of a franchise (albeit it had at least gone through a Christmas season,) especially with three major platform releases still to come. A decision to end the franchise purely on numbers, sales would have to be catastrophic. By most available metrics, sales were not catastrophic.
https://www.forbes.com/sites/mattpe...-million-copies-sold-through/?sh=6e717ddf7059
True, Vicarious Visions being reassigned/moved left the franchise without a developer. And VV had a big game with Blizzard coming up (which didn't release until Sept 2021... Diablo II Resurrected wasn't even announced until Feb 2021, which was
after Vicarious Visions was already moved over.) But Activision had choices beyond Vicarious Visions, with Toys for Bob being a prominent VV collaborator (although Bob is currently on assignment in the CoD mines and may never get out,) and external studios capable of contract work on an established title with a workprint from THPS1+2 set down. They just didn't.