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bunchanumbers said:
I never understood why this didn't happen. It wouldn't have been all that crazy to use resources from XCX and put them towards Xenosaga. Both even used the same art style. I really think that it wouldn't have been that tough of a project.

I think there are MANY reasons why this failed, but the biggest of them are:

1: Expectations for signatures was FAR too high. Operation Rainfall only had around 5,000 I believe (though there were other avenues of support, like it was a #1 Amazon preorder BEFORE it was even announced to release worldwide). Why go looking for multiple tens of thousands on signatures. I knew it wasn't going to happen, so I am not surprised this failed at all.

2: He was WAY to secret about what he wanted the game to be. Was it going to be a straight HD port? Was it going to be a remake? Was it going to be a collective project of Monolith Soft and Namco? If not, who was the team that was going to lead production? What system(s) was he even looking at bringing it to? 

That's my theory on it anyways.