Yes and no - If you look at sales, it looks like it but sales everywhere are down, bad times and they have been for years.
The problem is that there's no meaningful data.
(1) The former metrics for measuring total market size have been rendered obsolete. They measure sales through hobby stores, and reputedly large portions of the industry no longer go through hobby stores.
(2) Individual publishers reporting lower per-book sales mean nothing in terms of total industry size. There are simply more publishers producing more material today than there was 10 or 20 or 30 years ago. Even if everyone is seeing lower sales, that doesn't necessarily mean that the market is shrinking.
(3) What might be a meaningful indicator of industry health would be total D&D sales over time. But only WotC has that, and they're not sharing. And because of the market division created by OGL and 4th Edition, I'm not even sure that a raw number there would be particularly informative.
In terms of growing the hobby (which would be good regardless of what it's current health is), the solution is pretty easy at a conceptual level:
(1) Produce games accessible to new players ("easy rules" are a trap);
(2) Featuring methods of play which encourage pick-up play
In other words, produce an RPG that's as easy for newbies to start playing at Monopoly. And doesn't require any greater commitment than an evening with a bunch of your friends.
D&D Encounters is a step in the right direction, but not quite. The serialized format carries with it an expectation that you'll be back next week for the next installment. What I'm looking for is a format that's accessible to newbies for casual, one-shot play. If the game's any fun, the deeper, long-term commitment will take care of itself.
Honestly, the old megadungeon espoused in 1974's D&D manuals fits the bill. Not much else has done so since then.
