As my contribution to this discussion, the approximate income of the Wizards of the Coast subsidiary of Hasbro is $124.3 million for 2007. That is about half what it grossed at the turn of the millenia when Hasbro bought it. What percentage of that is D&D is difficult to determine, but the only info I could find on that was a 2005 State of the Industry bulletin that put D&D at 53% of a $20-$40 million RPG market. My cites are:
http://www.hoovers.com/wizards-of-the-coast/--ID__44995--/free-co-factsheet.xhtml
for the 124.3 figure and;
http://www.gamingreport.com/modules.php?op=modload&name=Sections&file=index&req=printpage&artid=186
for the other stuff.
Now you can go there and read that in 15 minutes tops and save yourself the two hours it took for me to chase it down among the 982 million google hits for everyone from NYT to Joe's Chicken Coop Gazette running the AP article.
Speaking of the AP article, it didn't seem to be a bad review from an "outsider looking in" perspective. If everyone felt about D&D the way we do, they wouldn't have done the article. They'd be focusing on the price of Heinsoo's hookers instead.
I don't think that WotC is focusing on DDI as their cash cow. Yeah, at $15 its overpriced, but frankley for guys like me that have a long history with the game it's mice nuts and I'll take advantage of the one-year deal to keep the price down, which seems more in line with what I'm actually getting. No, you can't compare it to playing 200 hours of WoW in a month for the same money, but you can only play so much WoW before you've had enough, and most of us have crossed that line, either on a daily or lifetime basis, or we wouldn't be on the net, reading boards about a game other than WoW.
But what does DDI do besides offer additional content to people who already play D&D? It give people a way to play who otherwise couldn't play because of geographical separation, obviously. It also gives people a way to play pick-up games and campaigns with people they never knew existed until they met them in a forum or in a chat room or wherever people will go to find a game. Think on that. Think how it expands the potential player base.
A lot of people are veteran players who no longer live somewhere that they can find a group of people, or are just too shy or too turned off by game shops to hang out there and find a suitable group. Some are too old to want to play with a bunch of kids. Some are too busy to spend the time needed to commute to a game. If those people have a way to meet and play with people anywhere in the world from behind the comfort of a computer keyboard, they are much more likely to do it.
You can say "that's what they've got WoW for", but WoW is a crummy social environment. There are games with a good social environment like Asheron's Call, but it's still a crowd and a lot less personal than a small group of people playing a persistant game. Yes, NWN does that, but if you want to play D&D, why not play D&D rather than a video game based on it?
I think DDI has the potential to bring a lot of those orphaned players back to the game and, over time, to grow the base steadily. It won't have all of the qualities of a face-to-face game, but it may have enough of them to make the sell.
And along with all of those new or old people playing the game, there will be a lot of Player's Handbooks and other books sold. That will lead to a broader market for peripheral products like books, and as the base grows, the number of in-person games will grow, which will sell tiles, dice and miniatures.
I won't argue that DDI will push PNP gaming into WoW levels. WoW is eye-candy and easy fun with little to no commitment, and a game like D&D can't compete with that. What I am saying is that it is possible that D&D will catch on with DDI to propel it, and that WotC thinks it is a gamble worth taking. I hope they're right. I'll still play with my boys like I've been doing for the past 30 years regardless of what they do, but I can't help but want the hobby to be as popular as possible.