Actually, I think they failed because they said the game will be released as digital only unless they can raise $500k(!) for physical versions. People thought the amount was crazy for what little bit they're bringing to the table. I for one didn't bother because I figured it'd be a waste of time, as it would never succeed. They ended with like 10% of what they asked for.
Btw, the kickstarter was over a year ago, and the game is still unreleased. Guess you can't expect more from Victor Ireland.
Edit: They hit $96k.
Sorry I didn't do my usual fact checking, been busy (I'm shocked its been over a year since that KS failed, time flies). I didn't support it either because the physical level was around $65 which for a PSP game was crazy to me, and as much as I appreciated the WD deluxe packages, I didn't need one. Plus the game didn't and still doesn't totally appeal to me. I supported this for one reason only, the chance to get more PSP physical releases into 2014 and get some niche RPG's we might have never seen released over here. And as you mentioned the amount for production was insane too, there was no way with an unproven IP (even considering the Atlus game, I never heard of it though) for people to support it with that much backing.
And I don't blame Vic it would be out now, if not for this unforeseen issue with the song, who woulda saw that coming honestly. His heart seems to be in the right place, unfortunately, he never anticipates all outcomes and things like this happen and sadly reinforce the stereotype he can't release a game on time for anything....sadly.
On the Gaijinworks forum he posted that he's in talks with various publishers over a whole load of games that might be considered. One of the titles someone asked about was Valkyria Chronicles 3. Read on.
Now he DID NOT say what was being discussed, (and no VC3 was not confirmed) but it's still a cool thing that if possible Vic could get some games from larger series that never made it out and that people are interested in. Also there are some odd requests over there (the evil bear visual novel court game?!?) that honestly would be hard sells anywhere but JPN.
Two things he did confirm though is the Lunar games will not be coming, and neither will Elemental Gearbolt, due to no light gun emulation (which is weird considering its playable with a controller...)