Yes, most games that don’t pass muster get cancelled, and publishers cancel them as early as they can. This is primarily because development costs only grow as the project progresses. At the start, you have one or two developers who write a pitch. Really early on, you only have one to five senior devs working on building a prototype for the approved pitches. If the prototype gets approved, the team ramps more and builds an entire playable demo that demonstrates all of the major game systems at work. If the game isn’t fun or engaging at any of these points (as determined by the executive types), the plug usually gets pulled. You should also notice that each successive gate that a game project passes through means the team grows larger and more time and resources are invested into it. This reaches a maximum when the project goes from being in preproduction (the core game systems are set in stone) to being in production (now you build out the rest of the game).
When a project is discovered to be lacking, there’s usually one major choice to be made - either cancel the project or try to fix the problem. If the problems seem insurmountable, the axe falls and the project is cancelled. If the problems seem like they can be fixed feasibly, then the publisher will continue. Gameplay experience quality is definitely one major deciding factor here, but so are things like budget, schedule, resources, licensing, and so on. Some projects are kept on life support because the executive is a huge believer. Most of the time, if the problems are caught early on enough the publisher will give the team some opportunity to try to fix it before issuing the kill order. Any game with a really long development cycle (e.g. Dragon Age Origins, Final Fantasy 15, Duke Nukem Forever) tends to be a meandering project like this. If the project has a strong vision for engaging core gameplay, it’s just a question of building it out. But if the project lacks this vision, the team can get lost in the wilderness while trying to find it.
Most games that don’t hit a certain quality standard get cancelled early and the public never hears about them. EA, for example, has tried multiple Knights of the Old Republic 3 ideas but none of the ensuing projects were considered good enough. This doesn’t stop them from continuing to try, but it does keep the audience disappointment at a minimum. Occasionally there will be some cancellations that happen for quality reasons later in the development cycle. Usually it’s because the project has undergone several major core gameplay changes and never really found its feet. One project I worked on for the PSP had this problem - the publisher needed a PSP title and the core gameplay just wasn’t there by the time they needed us to be in production. Sometimes a game gets cancelled because it just couldn’t find the kind of audience it needed to during the lead-up to launch. These cancellations tend to be the most tragic for everyone involved. The publishers are essentially throwing away all of their investment (plus anything spent on marketing), the developers have an essentially-finished game they spent years working on that will never see the light of day, and all of the gamers who were looking forward to the game thanks to the marketing material are disappointed that it will never come out.
The FANTa Project is currently on hiatus while I am crunching at work too busy.
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