if this film is released as is, it'll flop
No, not necessarily. It's a kid's movie first and foremost and I'm assuming kids would remain interested. The reaction of aggrieved nostalgic adult men online (I'm presuming the complaints were mostly from that demographic) are not necessarily going to account for 100% of the ticket sales. The movie could have done well. They're just guarding against the risk. But there are numerous reasons why the film could have survived despite the negative response to Sonic's appearance.
The whole point of licensing a franchise is that you found a story or concept you think is interesting enough to make a film about what's already been made; there's no point in paying a fortune for a license only to have the director completely change it.
Making the cartoon hedgehog look different is not completely changing it. Besides, absolute fidelity to the source material is unimaginative and dull. I've played a few Sonic games. But I'm not expecting that here. Not entirely. This is a movie adaptation. Not a 1:1 replica of a video game.
It's like buying an expensive luxury car only to go walking everywhere.
If these are the kind of counterarguments you're going to deliver, would you mind just sparing me any more replies?
Artistic expression is secondary to the core franchise concepts, and that's how it works; this is nothing new.
You're reducing the entirety of the series to the appearance of the character, which is superficial and facile. He still looked like Sonic. It's just a different art style.
Plus, they appear to have respected the core franchise concepts. It's still Sonic. The iconography of the series is intact, the characters, probably much of the lore. But it's also a creative take on/expansion of Sonic, which, in principle, is fine and probably the best way to go about any video game adaptation. It's a different medium, and it's partly live-action, so naturally there are liberties and differences that need to be involved to shift Sonic over into a different narrative format. This is "nothing new." Sadly, people whining about utter trifles like "Sonic looks slightly different!" is also nothing new. What is new is the studio caving to the reactions, which sets a terrible precedent going forward.
This decision does nothing for precedent
Not at all. The precedent has clearly been set. That's unambiguous. I just hope it doesn't lead to anything worse due to emboldening the people who complained in this instance and might be compelled to whine even more next time because they once got their way when they were unhappy about the way a blue hedgehog looked.