Glitch could have been sustainable, but it was not because of many reasons (This is just a brain dump so points will be unorganized). Some of the reasons I could think of are:
Making the wrong decisions at the wrong time
Not enough incentives to become a subscriber
Not taking enough cost saving measures
Not taking advantage of enough money making opportunaties
Tiny Speck spent valuable time and resources introducing updates that were nice to have, but are not really necessary at the time. Such updates include the website redesign, encyclopedia revamp, skills table revamp (yuck), new maps, housing switch, the switch to imagination, and client optimization. Time and resources that were spent on these updates should have been spent trying to think of ways to stay afloat.
If you ever asked people about the subscriber pricing, most people cannot justify being a subscriber because the subscription costs are too high, there are not enough matching wardrobe items to purchase, upgraded subscriber locked furniture can be traded to non subscribers, votes are useless, and being a subscriber does not really give you an in-game advantage.
Games in which subscribers do not get significant in-game advantages and unlockable content are unheard of, because it is just too good to be true. The in-game advantages should not be too great (or else it ruins the game), but there certainly needs to be more. Such advantages could include subscriber-only skills, upgrades, maps (keyed areas and party rooms), improved versions of tools, mini games and quests, being able to zoom in out out of a map, and more subscriber-only polls.
There needs to be more cost saving measures. Back in the beta, the game was only open for specific tests. Not only does that save costs, it also makes people more grateful that the game is open. Rather than thinking I can do that tomorrow, people may remember there are only three more days until the game closes again. Also, EOTW parties are funner than being on a street all alone.
Game resources can also be saved and updated on a more permanent folder rather than in the browser cache because downloading and redownloding game resources eats up lots of bandwidth.
Some of the updates actually increased operating costs such as the introduction of the new snaps feature (storing and retrieving tens of thousands of snaps), the new housing customization (storing and loading housing customizations for every player), and the new maps because it increases bandwidth and storage costs. The housing customization also increased code complexity and created lots of bugs for the developers to fix (especially with the moving process).
More money making opportunaties exists, but were never implemented. I still cannot believe why Glitch does not have a store that sells merchandise. Not only will that increase revenues, it will spread awareness of the game. Time limited offers can be implemented where people who become a subscriber or remain a subscriber before a deadline gets some special item (that only looks nice) that cannot be gotten any other time. Time limited upgrades, wardrobe, and vanity options that can be purchased using credits. Advertisements on the website and also above the game window can also be easily implemented. There are many ways to milk this butterfly (just look at other games).
For Glitch to be saved, Tiny Speck needs to convince investors that they can do better and take some drastic measures.
Also regarding the move to mobile devices. There are many MMORPGs that are not designed for mobile devices and will not move to mobile devices. Do you think games such as Runescape will be played on a mobile device? You certainly can, but it is not feasible.