I read this article an hour or two ago. My thoughts were basically that there is no chance in hell they'd close Tango if Hi-Fi Rush was as successful as some of those titles mentioned in comparison. Hades, Hades 2, Manorlord (insanely huge hit), and Balatro. Lots of games like Hi-Fi Rush are incredibly successful on steam now and the past 5-10 years.
I'm not saying they should've gotten closed down, I just don't think they would have had they hit those numbers.
I've made this point a few times but Tango was a lot more than just HFR. Ghostwire did proportionally much worse than HFR - it had a higher price and some Sony money but didn't sell very many copies and had like 4x the staffing.
But the reporting from Bloomberg indicates that the economics of the studio was probably not the number one reason for the closure falling here. As you say, a major breakout hit might have saved them, but otherwise, the decision may have come down to just that they were very early in dev, versus other studios that are still anticipating a release this year or next. From a strictly economic perspective, if you were culling the bottom earners, you'd probably close MachineGames before Tango, but the difference is MG hasn't shipped yet and Tango has, with nothing in sight.
This kind of logic being applied does underly a desparation in the studio, though. The only other recent publisher I can think of that was operating this way was Embracer, so the kind of economic constraints Xbox is now operating under must be quite dire if they're slaughtering their milk cows for food.