What "Hollywood insiders" are saying now is it was his fault...sort of. It seems Mr. Howard was a little difficult on the set. Whether or not that's true, it's also been mentioned that because he was one of the first actors signed, he earned more than the others, including Robert Downey, Jr. Entertainment Weekly also reported that supposedly Favreau and his producers were "ultimately unhappy with Howard's performance, and spent a lot of time cutting and reshooting his scenes."
As such, when Favreau and screenwriter Justin Theroux went to map out the sequel they found themselves minimizing Howard's story line. Once Marvel learned that Favreau was thinking of curtailing the role, the studio went to the actor's agents with a new and drastically reduced offer — a number that's similar to what supporting cast members were paid for the first movie. The agents, according to sources, were so taken aback by this new figure — estimated at somewhere between a 50 and 80 percent pay cut — that they questioned it.
There still hasn't been an official comment from Favreau or Marvel about these accusations. I do want to see some War Machine action in the sequel. Terrence Howard did a good job in the first but it can't be said that he made the movie the success that it was. It's a bummer to see him go but I'm still looking forward to the sequel.