Who determines what's a flop and what isn't? The sharemarket. A game's sales performance impresses the "sharemarket" the company's share price goes up. A game's sales disappoints the "sharemarket" the company's share price goes down. Quite simple really. And it isn't necessarily to do with whether a particular game makes a profit.
If CoD:MW2 sold "only" 2 million lifetime it would make a profit in terms of earning more than the cost of development, marketing distribution etc. But it's likely the sharemarket would have been looking for a significantly better performance than that. Firstly because the sharemarket looks for more than just profit, it looks for really good profit. Secondly the market is looking at the game franchise and whether it is on an ascending arc or descending arc. 2 million for MW2 would mean a steep decline for the franchise and hence a sign of concern about future profits from a company for whom this is a flagship game.
OTOH KZ2 selling 2 million is a success because 1. it probably made a fair profit at that number of sales, and 2. it is a massive sales improvement over KZ1. This means the market is happy that the game made money, and that the game franchise is a rising star. The market will expect KZ3 to do as well or better, and KZ3 (assuming there is one and it comes out on PS3) will be easier and cheaper to make because a lot of the expensive engine development work was done with KZ2, so selling at about the same or slightly higher level will mean greater profitability for the 3rd game.
A game can even barely break even, or make a loss and it can be seen as not being a flop because its sales performance bodes well for future success.
So flop or success is a complex issue. Normally a company's measure of flop/mediocre/success are roughly in line with the market's measure, but not always.
In the console wars a game can also be a relative flop if it was expected to shift a lot of hardware, but it doesn't. For instance if GT5 sells around 10 million games, but fails to give anything other than a 10-20% boost to PS3 HW on launch week (and maybe another 5% on week 2) then the game will have flopped in respect of one of its key commercial expectations. I'm talking from a Sony/PD/market expectations perspective here, not a gamer expectations. Flagship exclusives have Hardware sales as a KPI. A hardware boost was a definite KPI for Halo 3. I doubt it was a KPI for ODST, I don't think it will be a KPI for Halo Reach. I wonder if NSMB Wii has sustained hardware boost as one of its KPIs.
“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell
"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix