No they are that small because they aren't a true development studio, there was confusion before about what they were supposed to be. They wouldn't be this small 4 years after opening with MS's financing, they are in an area where Activision employees could easily leave and join them as well as Insomniac, Sony Santa Monica studio etc.
They were never meant to be a true development studio, I believe they are supposed to lead the creative and the leadership type of role but the actual grunt work will be done by studios they contract with.