Yes, it looks like Crash Bandicoot 5 was real, and it apparently would have featured the exact crossover you've all been wanting for years
Activision reportedly wanted to move more towards live-service, and we know how that worked out with Crash Team Rumble.
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It's been previously claimed that Crash Bandicoot 5 was in the works, and now a new report has shed some very purple light on the game.
Back in July, a developer that previously worked at Crash Bandicoot 4: About Time developer Toys For Bob claimed that Crash 5 was in the works, though didn't share all that much about it. They did note that some day people will hear about it and "it's gonna break hearts," and that certainly feels accurate, as in a new video from Liam Robertson at Did You Know Gaming, some details have been shared about the cancelled Crash 5 - the most notable aspect of the game being that it would have been a crossover with none other than the bandicoot's PS1 co-star Spyro the Dragon.
Yeah, right off the bat it sounds like you'll need to get some superglue to mend that broken heart of yours, as while Crash and Spyro have had some crossovers here and there, they've never had one that's a classic 3D platformer like their respective games. According to the report, the game would have been a direct sequel to Crash 4, with concept art and story details showing some classic villains as well as some new ones, and would borrow from the PS2 entry Crash Twinsanity.
This then apparently evolved into the Spyro crossover, where you could play as both characters moving through one another's worlds, with some team-up moves available too. Tonally the game would have been darker too, with the games' lore being more important this time around. In the end, the game never went past pre-production, as Activision reportedly wasn't happy with Crash 4's sales following how popular the N. Sane Trilogy remake was, instead opting for a push towards live-service.
Crash did receive a live-service game with Crash Team Rumble, but that stopped receiving updates in less than a year. But no, live-service definitely isn't a misguided thing for the games industry to strive for!
Whether this is the end for Crash or Spyro, isn't exactly clear. Toys For Bob is working on a new game, and many hope it's a new Spyro game, but you'll just have to wait and see for now.