I don't think "failure" was supposed to be taken in that context. I'm quite sure the game will have a pre-determined beginning, middle, and end. That doesn't mean the environments can't still be dynamic.
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I swear I remember reading that the ending will be defined by the player's actions, but I'm not entirely sure.
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Doubt that was revealed so early on. How story will work is still mostly a mystery. We'll see.
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I don't know how trustable a source Kotaku really is for this, especially since they're the only one I've actually seen mention it, but oh well. (It's mentioned under the headline "A Story With No Constructed End In Sight")