Kotaku reports that Activision shut the game studio down because Prototype could never find an audience.
We received a statement from Activision on the studio’s closing:
Although we made a substantial investment in the Prototype IP, it did not find a broad commercial audience. Radical is a very talented team of developers, however, we have explored various options for the studio, including a potential sale of the business, and have made a difficult conclusion through the consultation process that the only remaining option is a significant reduction in staff. As such, some employees will remain working for Radical Entertainment supporting other existing Activision Publishing projects, but the studio will cease development of its own games going forward.
Not too long ago, Radical Entertainment Senior Audio Director, @rbridgett tweeted:
Activision, who publishes the #1 selling video game franchise in the world, may be indirectly hinting at the fact that the Prototype franchise did not meet its quota.
Either way this is a sad day for the video game industry; our condolences to the lives affected by this loss.