They could have released it as an MP mode, or transferred it to another team that could provide content support.
As far as I know, Factions was canceled after Bungie's expertise, who saw this game as an opportunity to make a GaaS with more active monetization, only after that the project was killed.
Bungie, Nintendo and Electronic Ars had nothing to do with the game being cancelled.
ND decided to branch out the game from TLOU2 to turn it a standalone game. Then later ND decided to cancel it and focus on SP games only. ND has freedom to do whatever they want.
Bungie is not the boss of ND, and isn't even inside PS Studios. Bungie is part of the SIE Live Services Center of Excellence in the same way PS Studios and SIE publishing are. And there they share GaaS specific tools and knowledge, review GaaS specific part of the game projects and provide support. That's all. They can't cancel PS Studios games, in the same way they can't cancel Ubisoft games.
Bungie cancelling a ND game is a nonsensical idea.
XBOX has already tried to repeat this, and as a result, killed its own hardware, and has repeatedly failed in its attempts to create GaaS.
As a result, they acquired a ready-made COD franchise, and may become a publisher rather than the owner of a platform from which they could receive a commission.
Helldivers 1 (PC & PS game) was very successful, so Sony gave them way more money for Helldivers 2 turning it a AAA game, and it's being very successful.
Sony is the most successful gaming company, specially in console. Specially now, they are achieving all time gaming history records. With Sony's PC strategy they are performing better than ever.
MS bought the Halo and CoD brands, Sony acquired a good chunk of the talent that made them (and Destiny) great. A big differenece. For MS worked in the short term, but for Sony will work for the long term.
But XBOX did this against the backdrop of unprofitability and numerous injections from the parent company, while Sony's PS is a key business.
If they lose hardware and PSN revenues, it will knock them out of the gaming market leaders, essentially repeating Sega's experience, but they will have movies and TV shows (which can also fail, few people believed in Marvel's fall before). Mobile gaming is also not a stable market, and I don't really believe that it will be able to cover the losses from the PS policy change.
Xbox division always generated loses for them, so they are slowly killing their console on purpose and moving their gaming business to PC, mobile and the other consoles. They saw they can't compete in consoles, so tried with game subs making an all-in bet.
Sony's stategy instead is more profitable and successful than ever. In console, in PC (let's remember Sony also made MSX games, published in games as Psygnosis and had SOE, plus also had previous SCE/SIE games on PC like Helldivers 1) and in game subs. And they are starting to work and making deals for mobile, whose results will be seen in a few years.
Sony console hardware, console software, console game sub, console accesories are better than ever and growing. Their 1st party console games too, sequels of games ported to PC (GoWR and Spider-Man) broke all time sales records for any Sony exclusive. They are growing and half of console sales are to new users who didn't have PS3 or PS4, so these new fans come mostly from PC because it's bigger than the Xbox userbase. PS has the biggest active userbase any console ever had, because not only PS5 is having a record launch aligned number, but because they still have a huge userbase in PS4 that will migrate later.
So no, they aren't losing hardware or PSN revenues: they are improving it. They are getting new fans with (in part) PC. There are no loses, they only exist in fantasy land: Sony is getting record revenue and profits, even if most of it is spend in making more games, growing their teams and acquiring new ones.
Sony's success kicked out Sega and Nintendo out of the home console market and now they are kicking out Xbox, which is slowly dying because Sony is eating their market share.
