I'm only now catching up on this sad news, but I'm not very surprised. Streaming services have been bleeding money left, right and center and P+ isn't the first service to pull this "tax optimisation" ploy of removing series from the roster entirely (apparently that allows them to write off the costs of a failed product).
Unfortunately, I'm not surprised by this. It never appeared as one of the most popular at any given time list of even P+ children shows on the app. I saw a few ratings from when it aired on Nickelodeon and it did poorly in viewers compared to everything else on the channel. A few months ago one of the writers was on twitter encouraging people to watch the show and to watch it again if we had already seen it. It just didn't seem to catch on like LD did - I think many adults thought it was just for children and didn't give it a chance...while the kids themselves didn't seem too interested.
Yes, the signs were there, the lethargic pace at which merchandise was being released also pointed at this. Moreover, the announcement of an Academy series - exactly at the point where Prodigy would have a main storyline touching the same subject - while budgets were shrinking was no good sign either. I also have the impression that kids nowadays are more about Tiktok and Youtube and the like and things that require a longer attention span, like books and series with a serialised plot, are a relatively hard sell especially for those age categories. Cutting the season up in 3 pieces didn't help in this regard, the release schedule on different Nickolodeon channels was also weird.
Then there is also the ST fan reaction, which was rather tepid. Not only did many disengage because of the marketing emphasis on being a kids program, the animation led to immediate reactions like "I don't watch animation, that's for kids" and "I can't stand this style of animation". A pity, as IMO Prodigy's animation is gorgeous.
Even besides the animation, I don't think many ST fans really want something new. Prodigy brought genuinely fresh plot and new characters, but the initial reaction was "too much like Star Wars, no Star Trek in it except Janeway as an alibi". This while Picard S3 got heaps of praise and viewing figures to match, showing P+ where the money should be going: into rehashing the same characters and enemies. Curiousy, everybody noticed that some aspects of Prodigy resembled other SF series in general and Star Wars in particular (Tars Lamora, Denaxi depot, Gwyn's sword,...) but few people remarked that the climax of Picard S3 took quite some elements from
Return of the Jedi. People were so happy to see the TNG crew again, that any vices got overlooked.
Prodigy's serial plot is also an instant dislike for many ST fans (those who want purely episodic content) and being part of Kurtzman Trek immediately points a bullseye on it for those who are opposed to Kurtzmann. At the same time, as a generally "inoffensive" program for either sides in the present US culture wars (quite a feat in this day and age), it didn't get any particular free publicity (and support and hate watching) by creating polemic, either.
From a business POV, besides what are probably not terribly good viewing figures (especially for their main intended audience, the kids, I would guess), the present tendency of the media conglomerates to use AI to replace (or "fake replace" in order to lower wages) screenwriters also goes better with content like Picard S3, instead of new things like Prodigy. I could see AI using massive databases to create the base idea of something like Picard S3 (drawing from existing series and mashing them together), but not something like Prodigy.
I hope we get to see season 2
somewhere, at least. I barely dare hope for a pick-up for more content after that.