When the giant Actiblizzard katamari acquired Sierra's game properties, the fate of Red Baron Arcade became unclear. The PSN game was scheduled for a release last September, but has since disappeared off the face of the earth. Gamers Platform is reporting that the game is canceled: "Sadly, Red Baron was never completed; they had to stop the project when Sierra Online was incorporated into Activision-Vivendi."
Our own contacts confirmed that Sierra Online is no more, but could not verify if the game has been canceled. "I can't confirm that the game itself has been canceled. Sierra Online is no longer however, so they won't publish."
Considering no one seems to know if the game exists anymore, it's probably safe to assume that the project is dead.