Say a studio misses a milestone by a wide enough margin that the publisher decides to get involved. What exactly can/will the publisher do to put the project back on track?

Typically it takes more than one milestone for a publisher to decide to intervene. If the publisher believes that a project has gone off the rails there are two major options available. If they think the project is too far gone, they'll cancel the game and reallocate the workers, have a big layoff, or some combination of both.

If they believe the project is still salvageable, the usual process is to replace the team's leadership (or assign them a new boss) and send in their [rescue operators] to take up key team positions and try to save the project. The publisher's rescue team tends to be very experienced and very good at triage. They are there to take a hard look at what is currently going wrong and change the development trajectory to reaching minimum shippable status within the time given. This usually means replacement of the team's existing leadership because the project needs major directional change. The goal is no longer "make the best game you can", because that goal is now unreachable. Instead, the goal becomes "get the game to ship".

At this stage we don't have the resources to get new assets or significant code changes, so most of what we need to do is cobble things together that fit within the existing frameworks and work well enough to be a (mostly) complete and cohesive experience. Features and content that aren't up to snuff get cut or repurposed quite quickly here. Entire levels that are too far behind schedule to reach completion by the deadlines will be cut, set aside for potential DLC repurposing, or scrapped for parts/assets to be used elsewhere in the game.

Not all rescue operations are successful. I would say that one in ten or twenty rescue operations ship something pretty good. A good one third or so of rescue projects fail outright and get cancelled. The rest of the time, the project ships and then either get savaged by critics and/or players or get the 'mid' 7/10 game ratings that are so often quickly forgotten.

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