The game had been in development for 4 years of development and still wasn't finished. And the staff size grew 82% in the span of 4 years. There's no way that the studio could have sustained itself. Sometimes you have to cut your losses. It sucks that 50 people lost their job and the project cancelled, but it is the reality of business. They have to stay profitable somehow.
Pretty much this.
Its hard to make any calls about the state of the game because we really know very little.
In the end its a business and when things don't work out you need to cut your losses.
People are quick to call the failing of the industry on a few teams getting cut. These days companies are very public with their info, sharing much more then they used to. In the past companies silently disappeared unless a magazine picked up about it months after. The industry is in as much danger of a crash as it was 10 years ago, or 20.