From my own personal viewpoint, they made a bad decision. Looking past the fact that I have zero interest in GoW, the series doesn't seem to be on an upward trajectory after the subpar commercial performance of Judgment. Besides, could they not have put a team on it that wasn't pre-occupied with a project that had already been shown at E3?
At the very least, don't outright lie and say that the footage was "a concept piece." We all know that wasn't the case. I'd have some respect for the guy if he was honest about things and said "you know what, this is the safer option, the other game is cancelled, sorry folks."
Ugh stop using Judgement as a bench mark. Was Halo on a downwards trajectory after ODST? What about GT after Prologue? Forza after Horizons?
Consumers know the difference between mainline and not mainline.