[soneil]

Both studios were operating under different parts of Virgin.

Virgin Interactive owned Cryo, commissioned Dune, then later cancelled it. Virgin Entertainment kept funding the project, and Cryo kept working on it. Virgin Games engaged Westwood in the states, and the two projects continued in parallel. Don't adjust your set, there really is three different Virgins in the picture.

When they figured out they'd paid for & delivered on the game they though they cancelled, they just went ahead and released both. It's a good part of why Westwood's very next step was to get off the Dune IP (the other part being the cost).