WB Games recently announced the closure of several studios under its umbrella, and now Bloomberg's Jason Schreier has given the full backstory on what led to Monolith Productions being closed down.
The events that led up to Monolith being closed down a few days ago began back in 2017 following the release of Shadow of War, which wasn't as successful as the critically acclaimed Shadow of Mordor that earned Monolith it's stars and stripes. Following the release of Shadow of War, Monolith wasn't interested in developing another Middle-Earth game and went on to develop a new IP codenamed Legacy. However, WB Games wasn't and still isn't interested in developing new IP and wants its studios to concentrate on making games around already established IP.
Monolith continued work on Legacy for several years with the thought it would have enough sway due to the success it has generated in the past that it would be able to convince WB to pursue the new IP. However, that dream died in 2021 when WB Games canceled the project, which resulted in Monolith's entire leadership, including many other developers, leaving the studio to go and form what is now Cliffhanger Games with EA. That team is now developing the Black Panther game.

The team left at Monolith and was then forced to begin work on the now-canceled Wonder Woman game sometime between May and June 2021. The game was then revealed publicly at the Game Awards just 6 months after the team began development. Notably, at the time Monolith was still reforming its leadership team, and debates were ongoing about whether to use Monolith's in-house engine for Wonder Woman or move to Unreal Engine 5. The team decided to go with Monolith's in-house engine but ran into many issues as the programmers who knew how to utilize it correctly had already left the studio.
In late 2023/early 2024, Wonder Woman was officially rebooted, and the game completely changed directions. The iconic Nemesis System popularized in the Middle-Earth games was removed from Wonder Woman, and the game was molded into a more God of War-style action-adventure title. The Nemesis System within the Wonder Woman game was the reverse of what is in the Middle-Earth games. Instead of enemies being empowered, Wonder Woman would befriend NPCs.
Schreier goes on to explain that by this time, it was almost too late for Monolith due to previous failures under the WB Games umbrella. Titles such as Suicide Squad: Kill the Justice League being a $200 million flop, Multiversus, and Harry Potter: Quidditch Champions costing another $100 million, and then Monolith struggling with the development of Wonder Woman led to WB Games deciding to cut its losses, axe the studio, and focus on just a handful of predictable franchises: Harry Potter, Mortal Kombat, Game of Thrones, and DC Comics, but with an emphasis on Batman.