They've been dying for a while. Witch & Hundred Knight was an un-necessarily large project that still couldn't turn a profit on ~100k copies sold.
They lost a load of staff to Compile Heart a while ago, so presumably this problem isn't new.
And they've also produced a lot of bombas regardless of budget - things like Cross Thesis Paradox did absolutely terribly.
I think, if they were to survive going forward, it's going to be a mixture of Disgaea milking (which they're already doing) and really cheap stuff. Shin Hayarigami turned a nice profit for them, so more stuff like that.
It's a shame. They were a dev studio that produced a lot of quality JRPG's during the PS2 era. They just seem to have completely mismanaged things since then.
I'd be very sad to see them go (most of all because that means NISA might not survive. Although I expect they'd be bought out, there's always a chance they could go down too).







