The marketing issue they have isn't about the modernization of the game rules, it's about the brand. Gamers will always argue about rules, and whether a game 'suxx' or not, but the brand survives so long as people recognize exactly what it is. You cannot underestimate how damaging to the brand it is, when the core complaint leveled at D&D 4 is that "It isn't D&D".
Hasbro probably doesn't even make that much money on the core D&D game itself anymore, but the brand remains significant because it's a household name. Their modern boardgames, computer games, miniature games and whatever, all benefit from having the official moniker of "D&D" associated with it. That is your 'modern game' market. But it ceases to have value if the brand itself loses value. They can only maintain it if the original game stays true to it's origins.
And let's be clear about this, historically, D&D IS one of the most significant games ever designed. It was a true original, and massively influential. You cannot ignore this when considering it's future.
Sorry, but outside of the halls of nerddom nobody even knows what a hit point is. D&D is some quaint game that nerds play and argue about. All that matters to the brand is that there's a D&D community to keep some buzz going and some books on bookstore shelves with D&D branding on them. The novels and computer games are VASTLY more likely to enter into public consciousness than the obtuse details of game mechanics. Even those are rarely of much interest in their details outside of actual players. Arguments here between D&D aficionados are almost utterly irrelevant to the D&D brand.
Completely buzzword compatible. But it failed in selling to many of the people who were buying D&D 3, and I don't see any evidence that it succeeded in selling to a significant number of people who weren't playing RPGs.
Well, unless you have some hotline to some base of knowledge unknown to the rest of us this is all supposition. I'm playing now with people that are new to D&D as of 4e, so clearly there are some new people playing. The rest of my players have all played 3e previously, so again clearly 4e appeals to people that play/played 3e as well. They buy books, they subscribe to DDI, etc. I have yet to meet anyone in my circle who has even read PF, let alone bought it. I'm sure most of these people would be happy to play either game and don't really care about edition wars. 4e is D&D to them.
I stand by my case; radical changes to a product are a good way to lose existing customer base, and are mistakes unless they're carefully managed to bring in new market. I see no evidence that many people who weren't already roleplayers even know that 4E exists.
I doubt very many of them knew that 3e existed either, and even fewer know that PF or OSR games exist. Outside of enthusiasts of the game nobody cares. Of course it is open to debate as to what degree of 'careful management' WotC has exercised. I'm not a marketing guy, so I don't have much of an opinion on that. They sure have had a really strong presence on the ground in game stores promoting the game.
The problem is it is really immaterial about existing customer base. This is the point people are failing to absorb. The existing customer base wasn't sufficient make 3.5 worth continuing with already, at least for Hasbro. If it had been they'd have just kept making 3.5! If all they thought was they should put out some slightly updated books to up sales a bit they'd have done that too. What we think is kind of irrelevant. If existing customers were the only consideration none of this debate would even be happening.
Arguable? I think it's pretty clear that D&D 4 failed to keep the market share that D&D 3.5 had, and as I said above it didn't see it bring in new people.
And, as I said this is pure supposition on your part. Nor is the first part of it exactly relevant. Again, if the 3.5 players were the important target market then 3.5 would still be in print. It isn't. That's kind of irrefutable evidence that 3.5 wasn't cutting it anymore. As for the bringing in new people thing? Neither you nor I have even the slightest knowledge of that, so it isn't 'clear' at all.
Nor is it necessary to think that 4e failed in any major way. We KNOW for one thing that the targets set by Hasbro were completely unrealistic. You can read about that on this very site if you want. Beyond that, even if 4e is relatively successful that doesn't mean that it accomplishes the entirety of what WotC wanted. If they think they can do better then why wouldn't they continue and make an even better version of the game that corrects whatever issues there are with 4e? Nobody around here has ever said it is perfect. There's a big difference between perfect and failure, and there's a big difference between our perceptions of success or failure and those of the people making the decisions about the product line.
No on is suggesting they go back to exactly where they were. But if they don't do something to haul in most of the D&D players now playing 3.5 and Pathfinder, then they had better somehow bring in non-roleplayers. If they could reverse time and never put Paizo in the position that they decided to create Pathfinder, if Hasbro had kept everyone in the D&D camp, then things would much more profitable for them.
I don't know if it would be 'much more profitable' or not. Nor do I know that the existing 3.5 players are really that big an issue to the business types. From my reading their goal was and is to make D&D a much less niche business. I'm sure they would like to have Paizo's customers, but I think their vision is a lot bigger than that. Having a game that serves as a good base for novels, films, and probably most importantly online services, is likely a lot more important to them than catering to a limited number of customers who weren't sufficient to make them enough money to keep 4 years ago and will be even less likely to do so now.
Honestly, in the vein of "no publicity is bad publicity" the competition and controversy about PF vs D&D may well be good for them. At least it has the potential to get some people that do hear about it curious about D&D. For that matter it may well be that 4e has more customers than 3.5 did when they stopped supporting it. That's actually QUITE possible.
Absolutely. 3E grew the audience for the first time in a long time (anyone remember the mid 90s and the vampire/magic crazes). 3E increased the core D&D audience, 4E shrank. I just cant see much of an argument for continuing the 4E trajectory.
Except again, you have no evidence to go on for this line of reasoning. You have no argument one way or another except personal preference. Nor do we really have much reason to believe that the particular characteristics of 3e or 4e has a huge amount to do with the ups and downs of the game. 3e was a major break from 2e, and created an upswing. 2e was a minor update of 1e and did almost squat for sales. IMHO the evidence is that if you don't make some significant changes to the game when you republish it then you won't get much of a boost in sales.
And again we come to the nut of the argument. 3e is a game designed for the 20th Century effectively. It may be the culmination of 20th Century RPG evolution, but it simply isn't appropriate as a base for a successful 21st Century product. I KNOW this has been the judgment of WotC because they have said so in exactly so many words.
3E definitely made important changes to the game, but was a product that was recognizeable as D&D (they even brough back some 1E classes). Companies can make improvements but also need to understand their existing customers are there because they like the current product (they are not simpy waiting for something better). Deigning D&D for the eople who are least satisfied with it is not a smart move. The question is whether they should just cut their losses and cater to their current customer base (4E fans) or try to win back the customers who like earlier editions.
Winning back the old customers would be desirable, but it won't be a way to make a product that will survive. Certainly it cannot possibly be the only basis on which a new game is designed. It has to be suitable to the modern audience. There are just no 2 ways about that. That means modern styles of presentation which make use of improved understandings of how to structure and present information. It means more streamlined and easier to understand rules and play. It means being structured in a way that can be extended and improved incrementally and presented in forms like the DDI.
3e can't do that. I know people who love 3e will gnash their teeth at this, but 3e is a giant mess. It is obtuse, hard to understand, the rules are a giant irregular mass of obscure and hard to understand mechanics, etc. Really. How many kinds of armor class are there in 3.5? It is nuts. 4e is 82 times easier to understand. I think it is still not near streamlined enough, but it has a core design style that works for what needs to be done in the future to meet WotC's goals. That is pretty much clear (and again confirmed directly by statements made by WotC).
Going back is simply not going to happen. It can't happen. 5e may well be able to appeal more to more D&D fans, and that's great, but to think that it will be any more like 3.x or AD&D than 4e was? Not really. Not in any way that really matters. I'm sure it will pay homage to past editions, but it won't be any more like them than 4e is. Nor should it be.