I miss Confrontation. As best I can tell here's what happened:
Confrontation was a moderately successful game line that was growing, but had two big problems.
1. An enormous number of SKUs, coupled to a skirmish system, which meant that most players only ever needed 1-2 blisters of any item. And I mean enormous number of SKUs, like Battlefront levels. It was expensive to keep it all in production, and hard for stores to carry it all.
2. They became a publicly traded company, which increased pressure to generate profits.
The solution Rackham chose was to stop producing the finest miniatures line of the time, and switch completely over to a pre-painted plastic game.
The existing customer base pretty much dropped them like a hot potato, and they were unable to bring in enough new customers to generate sufficient revenue.
Edited to add
On a personal note, I regret selling off my Dirz, Griffons, and Acherons. They've very much held onto their value, judging from Ebay, and there continues to be an underground group that plays. There's even talk of meeting up at Gencon '14 for some Confrontation 3rd edition.
Currently, Cool Mini or Not has the rights to the game, but the old grognards aren't happy with the direction of the rules reboot (i.e. it's a new game, and not a tweaking/rebalancing of the most popular ruleset).