Oh, I'm fairly certain they know that.
Thing is, though, that the studio doesn't have other legs to stand on, financially. They make Cities Skylines and that's it. They can't ditch it and fall back on something else. And as the first game showed, there is a really profitable business to be found in selling DLCs. The way this game makes money is by selling a lot of DLC expansions, and for that, they have to get the game ready for it. They can't just abandon development and still exist as a studio that makes money. So I'm fairly sure they will work hard to fix what's wrong and get the DLC packs lined up for sale. Otherwise, they might as well shut down the studio here and now, instead of paying wages while things drag on toward no resolution at all.
Unless wikipedia is wrong, the CS franchise is owned by PDX, not CO. You're right, the studio just make CS and that's it, but PDX can pull the plug anytime or give the next CS to another studio.
PDX somewhat resurrected CS1 for last Christmas, after having said in 2023 they wouldn't release patches or DLCs for CS1 anymore. Ever. What's next? They could have some studio do a remastered CS1 with a new engine, fix the 5 most annoying things in the game, add the seasons and the 5 most popular mods plus a couple of DLCs. Considering the old CS1 is still the better game, such a remastered version would be a smash and a success for the next 10 years, exactly what CSII was supposed to be and still failling.
And while they are struggling to make it over a steep and nasty hill, and have been for some time, well, there is a really great game to be found on the other side. CS2 has promise, that's why we're all here, and that's why we're all so upset. Had it been a simple and cynical cash grab of a game, everyone would have abandoned it like SimCity. But we can see the bones of something great here, which seems to be just out of reach. I really hope CO will manage to fix their woes, and preferably soon.
If they're working hard and CSII is such a great promise, why is it still so poor after 17 months? I also thought CS II was promising at release. Now I think it's been badly designed, with lots and lots of mechanics added for the sake of it, maybe hoping the modders would make something of it. I'm pretty sure they're now overwhelmed by what they designed. The homeless are the perfect example of a simulation that doesn't make sense.
* Hey, what about adding homeless?
* Sure, good idea, every city has homeless.
* OK, what actions the player should take to prevent them? Where do they come from, where do they go? Do we add shelters?
* Naaah, don't bother. Just add homeless, we'll see later what to do about them.
As of now, homeless are still a problem because public transportation to export them can despawn when stuck but the passengers can't. So players have homeless walking on railroad or metro tracks or hiking on the highway.