It definitely had a marmite reaction from the few reviewers that bothered to play it. (3 reviews in the low 80s, 4 in the 20-49 range).
I had to agree with the latter reviews, I just wasn't having fun with it. I don't think it does any good to pretend it was a great game because that implies it failed due to lack of interest in the franchise. It was disconnected from what wing commander is and felt a bit like playing 3D asteroids.
Even at launch though I could never find enough player, I never earned the achievement for a 16 player game.
The context is absolutely crucial here. I find the contrasting reception that Prophecy on the Gameboy Advance received to be a very interesting comparison. In that case, the tiny development team took a knife to Prophecy and whittled it down until they got something that would work on the GBA... plus added in some awesome multiplayer. Absolutely nobody expected much, because it's the Gameboy Advance, and instead everyone approached it as some amazing marvel because it's accomplishing a lot for what it is.
Now if you're trying to play through the series and you're experimenting with the 3DO and playing FMV blockbuster after blockbuster, and then you hear the Xbox has a Wing Commander game too, then your expectations are going to be set at a certain level. And so if you go in with that mindset and you see that it's 3D asteroids, most people come away rather disappointed. But that's literally what it's supposed to be. It's an asteroids clone reskinned with a bunch of cool Wing Commander ships and some very creative alternate modes... plus some awesome multiplayer.
If you recall back to what Xbox Live Arcade even was, remember that digital distribution of games wasn't even a thing then (still, even though it was a decade post Secret Ops). Live Arcade debuted in late 2004 with Ms Pacman and a handful of other tiny little shoebox games. In 2006, a team of dedicated people finally got the green light to use the Wing Commander license to do something in the Xbox Live Arcade space. There were huge restrictions levied by the platform, not the least of which was a 50 megabyte cap. When we first got a preview of the game in early 2006, it was an incredibly simplistic top-down asteroids clone. Literally just asteroids with some WC ships. With no budget and enormous technical restrictions, the Gaia team and couple folks at EA Vancouver lovingly transformed that into the most incredible asteroids clone the world had ever seen at that point with numerous clever single player takes with callbacks to the series (such as the gauntlet over top of a Midway class carrier) and extremely fun multiplayer (such as the battlecruiser combat I mentioned above).
Here's the original incarnation of Arena (bonus Gothri is still in there):
Which turned into this:
With lots of plans to do all this:
I'm not saying Arena was a great game. In comparison to the gold standard Wing Commander experience, sure, I understand where most people got their 20-49 review score. But what I'm saying was that it was the absolutely most amazing game for Xbox Live Arcade released up to that point in the same was as Prophecy Advance was the craziest technical marvel released on GBA. Again, keep in mind that Arcade was limited to pretty much boring '80s arcade-style games at that point. There were also Star Trek and Battlestar Galactica competitors to Wing Commander Arena that tried to do the same thing in a much lamer fashion. While 16 players was an Xbox standard for many years prior, Arena was the first 16-player capable game on Live Arcade when it arrived. The BSG equivalent only supported 8 players and didn't have all the side features Arena did. If you were an expert in Live Arcade games in the mid 2000s, you would not have given Arena a 20-49. It absolutely would earn a solid 8/10 or so while its lame competitors got the 4/10 scores.
Unfortunately, all this is something of a nuance mostly lost to history today. You don't have to ever play Arena, but if you are a big Wing Commander fan ravenously getting acquainted with the series, don't just think of it as a disappointing Xbox game. It was a disappointment, because the team at Gaia had planned out tons of expansion content: the addition of the Gothri and Centurion, campaign story missions with Confed, the Kilrathi and Firekkans and more, but they never got the time, budget or mandate to go make that happen (this is all in the CIC archives). That's the disappointing part. It's only half the WC game that they envisioned, and it would have been much better received with the full package, but the half that they produce absolutely trounced the competition of the day.
Every couple years, somebody within EA or with a connection to the series tries to take a run at the franchise and make a new WC product. For nearly twenty years, all have failed to see the light of day, except for Wing Commander Arena. Arena doesn't compare well with other cutting edge contemporary games of 2007, but I'm really proud of how it pushed the boundaries of the confined platform that it was created for.