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This show was pulled off the air and cancelled after episode 4 due to poor quality. I've been watching anime for 20 years and I've never heard of such a thing before.

Crazy thing is the show wasn't even that bad. It has the same problems every show today has, namely poor writing with no coherent story buildup, and poor directing/cinematography. But I've seen far worse.

Heck the miserable hack job Studio 8-bit is making of Rewrite this very season is worse than anything Regalia has failed at.
Xcalibur said:
This show was pulled off the air and cancelled after episode 4 due to poor quality.
Seriously? The mecha battles were actually good, but the story was incoherent.
Radioactive said:
Seriously? The mecha battles were actually good, but the story was incoherent.
It can only be a good thing though.
This is practically unheard of in the industry. If a show is poor quality and doomed to sell poorly, 10/10 times the studio will say "fuck it", and take the loss. This is doubly true for an anime original show.

It takes a lot of dedication, effort, balls, and humility to blatantly say that this show you spent all this time putting together is nowhere near your level of satisfaction, pull it off the air, and go back to the drawing board. Getting all of the animators, artists, fxers, seiyuus, and everyone else back in to get the show done in a little over a month. Any studio that cares that much gets nothing but praise as far as I'm concerned.
It wasn't canceled. It's been postponed - which is still a big deal but not as drastic. According to ANN, the folks making the show were not happy with with the quality level they were getting vs what they had planned for and decided to delay showing the rest so that they could do a better job. So, it's gone for now, but it's coming back on September 1st.
According to MugiMugi in another comment, it's more like they can't catch up the broadcasting deadline (they won't say that in official annoucement either way..)
It's still a pretty big deal. Contractual obligations for things like this are taken very seriously, and messes up the schedule for the broadcaster in a way they're not really prepared to deal with (because nobody ever does this).

This is why so many shows see such a huge drop in quality midway, if the staff is struggling to keep up with schedule they just throw whatever they could manage on the air because postponing is normally considered a non-option.

Shaft is a classic example. Remember Tsukuyomi Moon Phase, and that one episode near the halfway point where the screen was just black for almost 3 minutes but the VAs were still voicing their lines? They couldn't get the episode finished, so it was simply aired unfinished.