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It just doesn't make any sense why EA would turn down a project that is basically ready to enter production. The design bible is complete and ready to use. It doesn't make any business sense, and it doesn't make any creative sense.
The only two possible explanations I can think of are:
1. Someone high up at EA has a serious dislike for American McGee and his fans, and blocked Alice Asylum from happening just to spite him.
or
2. EA actually did like the ideas presented for Alice Asylum, but turned away Mcgee in order to take the project in their own direction with one of their internal studios.
(Basically a similar situation to when a game studio named Vision Scape Interactive presented the idea of a Sonic skateboarding game to Sega, only for Sega take the idea and hand it to one of their own studios, Sonic Team, for development, leaving Vision Scape Interactive out of the project. This is the game we now know as Sonic Riders.)
now that's way more understandable, I choose to believe this, makes this ♥♥♥♥♥♥♥♥ more tolerable
So sadly that is pretty much the number 1 reason. EA is more focused on their bigger franchises and "live service" crap and micro transactions. It has had more of a cult following today but still that is not enough. He pitched a 3rd game to EA and they said no. They own the rights to it so there is nothing he can do. He has moved on and has quit game development entirely now. So it is never going to happen.
Oh shiiiiiii. I think I just gave them an idea.
he gave up sadly
If they gave it the green light, it would have most likely cost them more than they would have made for advertising, marketing and production. So no point in going ahead with a non-profitable product.
They did not sell the rights back (or give them back) because that's just more competition on the market. Even if it were to be tiny, there's no risk having a successful IP against them.
Not in the second game
1) I'd bet EA either plans to reboot the series and remake these games; since older IP with cult followings are prime targets for quick cash grabs while alienating older fans. Extra true for ones that were financial failures initially but went on to become financial successes in the very longterm.
2) Alternatively they could have polled the concept and just decided it wasn't the right time to release a dark adventure game; especially since adventure games are ones that tide-ebb in the economy.
3) They may have also found content in the IP that they felt was questionable to the current times; especially if it's questionable in the Chinese/Asia market which is becoming a very large target audience with very strict barriers for entry.
4) Economic times and internal office politics, "corporate bean counters said no".
The IP is so so "important" to them that it wasn't touched in 12 years too...
I mean, that's a crazy long ass time, I remember when Madnress Returns came out, I was still in college. lol