Uwe Boll should make a movie from "E.T., the videogame". No way does civilization survive that one.
I remember when Romero was predicting these huge numbers for Daikatana before its release and everyone was just mystified. And how in the Bejezus did Ion Storm make Deus Ex, one of the greatest games of all time? Did someone sell their soul to the devil?
Other disasters......Hmmmmm........ Well, strictly from a "quality of gaming" viewpoint, I'd say that the theft of Halo from the PC as an XBox Exclusive ranks up there, but I suppose that's not what you are looking for.
Are we just talking flops here or just items of extremely bad taste? The ridiculous "Hot Coffee" minigame in San Andreas comes to mind. And that first trailer for RE5 was pretty horrible.
Um, does Ultima IX count? Its failure was not as epic, I suppose, unless you were an Ultima fan.
How about the inexplicable implosion of 3DFX? Man, I still can't fully wrap my mind around that one.