Update: Microsoft has confirmed the cancellation with a statement.
After careful deliberation, Microsoft Studios has come to the decision to end production for Scalebound. We’re working hard to deliver an amazing lineup of games to our fans this year, including Halo Wars 2, Crackdown 3, State of Decay 2, Sea of Thieves and other great experiences.
Back in 2014 at E3, Microsoft announced Scalebound, an ambitious open-world title from Platinum Games involving a dude and some dragons. The game fit a solid niche in Microsoft's Xbox One slate, offering a game from veteran Japanese studio Platinum Games directed by Devil May Cry and Bayonetta director Hideki Kamiya.
Unfortunately, after a brief trailer at E3 2016, Microsoft stopped talking about Scalebound. The title wasn't on Xbox Wire's list of Xbox One titles coming in 2017. The Scalebound page formerly at "www.xbox.com/games/scalebound" now redirects to the Xbox homepage, though other entries remain live on Microsoft sites. So what's happening with the game?
According to Kotaku, Scalebound is in trouble and the game may be cancelled. Anonymous sources have told Kotaku that the ongoing development has had issues for a long time now. Eurogamer backed that report up with its own story, citing its own sources and a definitive cancellation of development towards the end of last year. The latter report also explained what happened: senior Platinum Games staff took some time away from the gamer in autumn due to the pressure of the rocky development, which put the game behind schedule. Following their return, it was decided that the project needed to stop.
This is not the only Microsoft backed title that's had some issues since announcement. Fable Legends was cancelled in March of last year. A reboot of Phantom Dust was in development, only for it to be cancelled and replaced with a straight re-release of the original Xbox title. Crackdown 3 was originally set for release in 2016 before being delayed into 2017.
That's not to say it's all doom and gloom, as Microsoft released Forza Horizon 3, Gears of War 4, ReCore, and Dead Rising 4 in the latter half of 2016. 2017 also sees games like Halo Wars 2, State of Decay 2, and Sea of Thieves, but it's clear the publisher is having some issues.