The groups responsibilities include "machinima sequences", which I take to include most pre-scripted in-game sequences that have NPCs doing something; triggered, say, by ending a quest. I suspect there are a lot of those.
(I wanted to compare that number to the people writing the quests themselves -- it still does seem high -- but that group isn't explicitly mentioned. The keynote is definitely glossing over a lot, even at this level of detail.)
I think when he said 'cut scenes' he meant the 'machinima sequences' as opposed to the pre-rendered cinematics. And there really aren't very many of those, either, far fewer than you seem to think - it's a very rare quest that ends with or contains such a sequence.
Not that rare, I remember a dozen or two across Northrend. Almost every major quest chain ends with such a sequence (and most of them involve the Lich King taunting you). Admittedly the many many quests along the quest chain typically don't have machinima sequences.
Sorry what are you talking about? There's exactly one ingame cinematic in WoW (Wrath gate) and 3 prerendered once (intro video for each addon & maingame). That's it. The 123 people of the cinematic team at Blizzard produce videos for all Blizzard games and are currently heavily involved in Starcraft II, which is supposed to have an hour of ingame cinematics as well as several minutes of prerendered videos.
The poster is talking about things like 'Lich King stands around talking shit' and (the now defunct) 'Marshal Windsor takes an excruciatingly slow walk through Stormwind' scripted bits. They're still quite few and can't possibly require anything close to 123 people (Red vs Blue was done by two people, after all and probably has more machinima in two episodes than the entirety of WoW).
(I wanted to compare that number to the people writing the quests themselves -- it still does seem high -- but that group isn't explicitly mentioned. The keynote is definitely glossing over a lot, even at this level of detail.)