Absolutely - in all deference to Erik and Mike M., they have enormous advantages today that smaller publishers don't have. The one fallacy that does get me cranky, self-admittedly, is the "if it were good it would sell as well as D&D." There may be a lot of crap out there, but there's lots of good products that disappear in the back bins of LGSs.
The main advantage Mike Mearls has (or, rather, the main advantage of his employer) is that he works with Dungeons & Dragons, a brand with 85% name recognition in the GENERAL PUBLIC, and a brand with a 35-year tradition of high quality and market leadership. His is also the best-capitalized company in the industry, with long-established market dominance in the hobby and mass market retail channels. Dungeons & Dragons has an existing network of players (i.e. customers) that is at least two, possibly three or four orders of magnitude larger than that of any other brand in the industry.
The main advantage Erik Mona has (or, rather, the main advantage of his employer) is that he works with an Open Game Licensed version of Dungeons & Dragons, which allows his company to tap into the largest player network in the industry. His company also has a robust online community (built-in self-selected audience of potential customers), a strong electronic publishing initiative, an innovative subscription-based revenue model, and competitive representation in the hobby and retail channels. It's also not a wholly owned subsidiary of a multinational corporation, which means it can get by happily on modest success thanks to lower overhead costs.
There is no existing fallacy among gaming professionals, from independent operators like James Mishler to brand managers and major corporations like Scott Rouse, that "if it were good it will sell as well as D&D." Anyone with an even basic understanding of the RPG industry knows that _no_ pen and paper RPG will sell as well as D&D. It would take a CATASTROPHIC failure of game design, distribution, and probably the economy overall for the D&D business to falter to the point at which another company can even contemplate selling in the sort of numbers that Wizards sells.
Most gaming stores, if they carry RPGs at all, carry only Dungeons & Dragons. No, I'm not talking about good stores, but ALL stores that carry RPGs, which vastly outnumber the good stores. When Paizo was publishing 3.5 products with production values and quality equal to or exceeding that of Wizards of the Coast, we continually ran into retailers who refused to carry our line (or the products of any other publisher), because it "wasn't D&D". This is even though we published 100% official D&D in the form of Dragon and Dungeon magazines for FIVE YEARS. Many of the same stores that ordered a few copies of Dragon a month didn't bother to check out our stuff, and still haven't.
That's after 7 years, about 20 ENnies, contributions from many of the biggest artists and writers in the industry, and an awesomely loyal fan base.
Companies that are basically one dude with some desktop publishing software working out of his basement, or who only do PDFs, or who can't get the interest and attention of honest-to-god hobby distributors like Alliance or ACD are completely screwed out of participation in the "industry," and frankly aren't really a part of it in the traditional sense.
This in some ways makes them immune from the challenges that come with major distribution of printed product, which has its advantages to be sure. That's why a lot of folks in this category have been able to find market niches for themselves like direct sales of PDFs, POD, patronage models, etc. You've got to have some sort of angle, because until you can prove to people like Diamond Book Distributors or PSI that you have an audience ready to buy your product in significant numbers, you're never ever going to see one of your products in a bookstore.
Even then, modest success is going to net you something like 3,000 sales, and a huge success would sell maybe 10,000 copies. I hear from a lot of PDF-only publishers that moving 1000 units is a huge, smashing success.
If Wizards of the Coast sells 10,000 copies of a book, they have probably lost money. If a product line routinely sells this number of products, that line will likely be canceled next time it's time for the managers to solicit new products.
A tremendous success in this industry for any company (including Paizo) would likely be viewed as a terrible, terrible failure at Wizards of the Coast.
Thus has it been for the publishers of D&D and the publishers of games that follow in its wake since, oh, about 1974.
And I don't expect it to change.
--Erik