It's been broken as a story in a few places, but an interview with Microsoft Game Studios head Shane Kim has revealed the official cancellation of Marvel Universe Online, Marvel Comic's MMO. It appears that both Microsoft and Marvel have decided to walk away from the project with the reason being:
"When we first entered into the development and agreement of the development of Marvel Universe Online, we thought we would create another subscription-based MMO. And if you really look at the data there's basically one that's successful and everything else wouldn't meet our level or definition of commercial success."
It's exceptionally hard not to jump to the conclusion that the "one that's successful" is World of Warcraft. If that's the level set for success, then I have to assume that Microsoft Game Studios is never, ever going to get a MMO released and will probably cancel 99% of its titles under development. It's estimated that WoW generates an annual revenue of over $1 billion dollars and an annual profit of $520 million (those are projected figures; according to other info Blizzard, driven by WoW, actually did a bit better than that in 2007). I think I can safely risk what little credibility I have and say that WoW is the most profitable MMO ever. It could even be the most profitable PC game ever, because it's still earning huge bucks.
Comparing anything to WoW is not a fair basis for comparison for success. It's the outlier of outliers in the MMO world, having huge player numbers as well as using a subscription-based payment model. Oher MMOs might have millions of players, but they typically don't also have sub-based models that drive revenue. Subs-based games can be very profitable, but tend to have a smaller number fo players. WoW has the best of both worlds.
There are some alternative thinking that could be in play, also around player numbers. It's possible that MS Games Studio requires their games to sell millions of units in order to be successful (just like their top selling console games) - this certainly isn't guaranteed for MUO, which would require more money to develop than a single player game. Perhaps Marvel weren't sure their game would gather at least a million players, which is a pretty rare thing in the MMO genre anyway. The numbers to support the development of a MMO are already pretty shakey, especially since 'sure-fire' hits like Star Wars Galaxies or Vangard: Saga of Heroes can come nowhere near meeting market expectations.
In the end, I think the decision to cancel came down to risk. Console-based MMOs are risky since they have rarely been done. PC MMO players may not have come to play a MMO built for consoles. Alternate payment models like real money transactions (RMT - I know some other places call it 'micro-transactions') are not that popular among Western gamers and also putting that to Western console gamers who don't play MMOs... yes, it's a risk.
But these are risks that should have been pretty clear from the start. If anything, the MMO market has become even more attractive to release games in, and if MS / Marvel thinks that releasing the next iteration of Marvel Comics Online sometime after 2010 is going to make things easier for them, they are sadly mistaken. MUO was announced post-WoW and I can't see that the MMO market as having structurally altered past that point in a way that would dramatically invalidate MUO's development (although Vista flopping might have helped put the breaks on a Vista-exclusive MMO for PCs).
Strategically it also seems like a dumb move by MS Game Studios. It leaves MS Games Studio without a next-gen MMO for either Vista or the Xbox 360, leaving Sony much closer to getting into the cross-platform MMO area first with The Agency. MUO was meant to finally add a MMO for the Xbox 360, but this kind of cancellation just adds to my hunch that the Xbox Live architecture can't handle massively multiplayer scaling particularly well. The cancellation also makes MS Game Studios look incredibly flakey when it comes to MMOs - they've killed or off-loaded several MMOs (like True Fantasy Online or Vangard) that they'd spent money on developing without ever seeing a return on investment.
The news also makes me feel sorry for Cryptic Studios. I'm a fan of their output (City of Heroes / Villains) and really wanted to see them release something new. Since the MUO teaser is still up on their website, I'm guessing this official announcement probably took them a bit by surprise, even if they knew it was coming. It also changes the perspective of their sale of CoH/V to NCsoft - assuming they don't have to pay any money back to MS / Marvel, they probably needed an inflow of capital to further develop some of their own MMO properties. A rumour exists they'll be announcing something new on February 18 - I hope they do. I'd hate to see Cryptic close after showing so much potential.
All in all, this just adds another sad chapter to history of the Marvel Comics MMO and its third cancellation. Someone's really not trying here.