Bethesda marketing VP Pete Hines talked to GameSpot at QuakeCon about the game and explained why it was canned.
"I mean, honestly, it's really not that complicated," Hines said. "It hit a point where it wasn't shaping up to be what we wanted and there didn't seem to be a clear path to get to where we thought it needed to be. We decided the best thing to do was just to not proceed. That's just it."
Hines added that he doesn't think Bethesda will ever go into more details about the situation, as it's all in the past and developer Human Head is working on other projects now.
"I don't want to go through and talk about stuff like, well, he said this and we said that," Hines explained. "I want those guys to have every success and to not have to keep bringing up this thing. Games get canceled. It happens. Marriages go bad. It happens."
http://www.gamespot.com/articles/why-prey-2-was-canceled/1100-6442387/Despite not wanting to bring up the past, Hines did contact Human Head co-founder Chris Rhinehart before Bethesda revealed the new Prey at E3. He wanted to give Rhinehart a "heads up" on what was going to happen.
"Again, I want him to be able to do his job and not have to worry about explaining or defending anything," Hines added. "It didn't work out."