I think I disagree with your first point, and agree with points two and three. However, I think it's important for people to have some perspective here. Lay offs, downsizing, cancellation of projects; those things are all normal, and happen in every industry. Big businesses make decisions based on numbers, and future expectations. So almost everybody always hires too many people when things are good, and then has to lose head count when things slow down. It would seem like there should be a way to avoid that, but no industry ever seems to have figured it out. But the gaming industry is not employing fewer people now than it was a few years ago. Even after all these layoffs, I'd bet it is still substantially bigger by headcount than it was several years ago. Companies in the gaming space, like most of tech, went on a massive hiring spree a couple of years ago. They overshot, now they have to get back to a more realistic size.
And cancellation of games happens all day, every day, and has throughout the history of the industry. It's normal, and healthy. They start with a lot of ideas, and most of them fall off as they move through development. You see which ones are shaping up nicely, and cancel the ones that are not. Again, normal and healthy. The only other option would have somebody saying "no" to even more ideas before they even make it out of the brainstorming session. That's not what we want. I think it's good that they give some budget to a bunch of potential games, and let some preliminary work take place on them before deciding which ones get to move into active development, and which ones don't.
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