Has it (and other titles with a comparable design pallete) been quashed by the Western style of AAA video games (focusing on cinematic cutscenes, desaturated tones, and realism)? This game may be an oddity for the Xbox's game list, probably an explanation for this game's unpopularity. Too few people (the Happy Wars community a good portion) like this style.
If I developed a game, it would pay homage to the Japanese games of yesteryear with saturated tones, fantastic elements, and simple style. Just drop the corny title.
Besides the lag, unbalanced gameplay, and the fact of clans/etc. being such a threat, what do you think explains the unpopularity of Happy Wars?