Crytek have two fundamental problems and I suspect a lot of people have known they’ve been in trouble for a while as the writing has really been on the wall.
Firstly, they have been badly mismanaged and have expanded way too aggressively following the initial success of Crysis, without having a clear direction for their studios or their products. After Crysis shipped, Crytek opened studios in Ukraine (2006), Hungary (2007), Korea (2010), Turkey (2012) and China (2012). They also acquired Black Sea in 2008, Free Radical in 2009, and acquired the staff of Vigil (2013). How Crytek expected to run nine offices without each having any clear direction is anyone’s guess.
Secondly, they haven’t been shipping successful products. With nine offices housing at least five capable development teams, they should be capable of pushing a lot of product, and with their tools, those products should have been fairly high quality. What have we seen since Crysis though? Two Crysis sequels that abandoned what made their predecessor successful in order to pander to the console market, Warface which failed to cater to the free-to-play Russian market and never made it into the west, Ryse as a rushed launch exclusive that lacked gameplay for a console that noone wanted to buy into early, and Fibble as a mobile game that most of us have never heard of. The final nail in the coffin, was that they haven’t been able to license their engine to anyone.
Looking at those two aspects of Crytek’s recent history and it should be no surprise to anyone - they’ve expanded well beyond their means to support themselves and are collapsing under their own weight. They’ve been too busy chasing whatever market is apparently trendy at the time instead of focusing on what made the studio successful to begin with. If they hadn’t been drooling over potential console market share in 2008-2011 and drooling over potential mobile and free-to-play market share in 2011 onwards, they might have been able to focus on their niche.
Crytek could have been the studio that caters to the top-end PC market crowd (with Valve and Blizzard occupying the other end of the spectrum), a vacuum now left behind by struggling iD Software and not looking to be filled any time soon. Crysis and Warhead have shipped about 5 million units between them just on one platform- but Crysis 2+3 have only just made that combined on all platforms.
Instead they’re trailing behind everyone else and chasing other potential markets already filled by throwing out a Left 4 Dead clone and trying to make space in the stupidly crowded MOBA market far too late.
TL;DR version: Expanded stupidly, wasted money chasing markets outside of that which made them successful, released lack-luster titles.