Yes, but Paragon Studios could have been working on CoH2 if NCsoft had given it the green light. Incidentally, it could have been more successful if NCsoft had thrown just a modicum of marketing dollars at it. Why have one successful game when you could have had two? Why shut down either game and piss off a community, a move that would undoubtedly have ramifications on your other business? Again, City of Heroes was not losing money. I'm not saying that it was a bad decision not to shut down Guild Wars or develop Guild Wars 2. I am saying, however, that it was a bad decision to not develop City of Heroes 2, and it was a completely numskull decision to shut down City of Heroes and kill off Paragon Studios. And then to follow that with not allowing the management of Paragon Studios to at least buy the IP so that you could milk a few dollars off of the husk of what you're throwing away is truly a move that only a frontal lobotomy could produce.
Timing is everything.
Guild Wars came out in NA almost exactly a year after CoH. By the end of 2006 it had more cumulative sales than CoH with CoH having a year head start. By then they had two expansions out and the game was available in numerous Asian countries including Korea, Japan, Taiwan, Philippines, Malaysia, Thailand, Singapore. They were having international PvP tournaments. Three months later ArenaNet announces both the next expansion AND Guild Wars 2. So they got their go ahead on development when they were on top with one more expansion to bank so by the end of 2007, Guild Wars had 21,700 million KrW more in cumulative sales than CoH.
Once the last expansion for Guild Wars was released, nearly the entire development staff except for literally a handful, were shifted to Guild Wars 2 development.
Now Paragon Studio wasn't created until the end of 2007. By then the Korean beta of City of Hero was dead by nearly a year and there was no further attempt to bring it to anywhere else in Asia.
Now I'm not sure when Paragon Studio pitched MMO ideas to NCsoft and got at least one approved to ramp up or shift staff to it. I'm guessing after GR which by then CoH sales were already settling at only $2.5-3 million a quarter.
ArenaNet had the advantage of not needing to crank out significant content two to three times a year. This let them move most of the development team over to a new project, one they got the OK for when they were flying high in sales with proof that their game design could succeed in Asia.
Also this was before the debacle that was Tabula Rasa. It's likely that the bar of what they would accept as a "good idea" for an MMO was now set higher than it was when GW2 got the green light or they became much more conservative about play style, looks, etc.
And Carbine Studio was founded in 2005 and bought by NCsoft in 2007 (as best as I can tell), again before Tabula Rasa went down in flames.