That's genuinely unfortunate, I was looking forward to it.
I think a genuine problem for Blumhouse's brand perception is that they've been less able to bury their unsuccessful efforts as they've moved into higher budget movies. They made a lot of clunkers during their peak, but those generally got chucked to VOD or limited release while the better movies went wide theatrically. That's easier to do with a $3m movie than a $15m one.
This is exactly right. Blumhouse famously/notoriously did not guarantee theatrical releases for the grand majority of its films for a long time. (Sequels to successful films usually had a theatrical guarantee, as did films that required a partnership with an external brand or IP, like
Ouija.) If it's clear a film isn't coming together or just isn't going to work at the level that warrants a theatrical release, they more or less invested as little as possible in postproduction to reach a "minimum viable product," at which point it got shuttled to whoever was willing to pay for it. Sometimes that meant Netflix (a better-than-usual result). In others, it meant straight to VOD, or marooned on some channel you've never heard of.
And to be clear, this happened even with name talent attached. Who remembers
The Keeping Hours, a supernatural drama starring Lee Pace and Carrie Coon? The film was almost entirely abandoned and given no real release.
Blumhouse could afford to do this because their films cost so little. Their usual limit for a new feature film that didn't involve an external IP was $5 million for a long time. Many were produced for under $3m, or even $1m. Inflation and other production realities has raised that ceiling up to closer to $15 million, now. To Rage's point, it's much, much harder to shrug off a production that cost you $10 million+. It's also why you see Blumhouse taking fewer risks and more "safe" sequel and IP plays.