Sure, but did they really expect the death of single player games to the point that they would flat out refuse games for being single player? That's kind of crazy
Look at it from a business point of view, these guys from Spain come to you proposing a single player tower defence type game and they want you to fund it. But your current business strategy is multiplayer games as a service. Where does that game fit in? It's not like they maliciously rejected it, it just didn't fit their business strategy. It probably wasn't worth taking it and paying for retooling to MS. Sony must have saw some potential in it and took it.