The cancellation of Scalebound was a shot to the gut many gamers had to endure yesterday, and many were not happy to take it. After their press release announcing the cancellation, Microsoft head Phil Spencer responded to a fan on Twitter saying he felt the move was "better for gamers"...
There have been no real details from Microsoft or Platinum Games (who was heading up development) as to why the game has been abandoned.
Perhaps the project was too ambitious and the money wasn't there for Microsoft to continue pouring money into the project when they have many titles coming out in 2017 they still need to market and get gamers excited about. Maybe the trailer was the best thing about the game and there were fundamental problems with development that just couldn't be worked out at the time and it's possible we could see it again down the road.
All we really know is that we aren't getting Scalebound any time in the foreseeable future...and that sucks!