AbdulAlhazred
Legend
Well, first of all we of course lack the information needed to say this. I don't know that DDI is a failure. The only evidence we have says it has a pretty respectable subscriber base. It is pretty unlikely it doesn't make money. If something makes money and doesn't represent a vast drain on resources, AND fills a strategic function then a business will not normally terminate it. Nor do we know or have ever heard that WotC was told D&D would be 'shelved'. The story if you read it simply says that if they reached a certain threshold they would open up many more resources and be a core brand with corporate level funding. In fact nothing convincingly tells us that 4e has been an especially unsuccessful edition if you simply take it on its own merits and don't try to compare it to some totally unrealistic plan.But it's the only move they have. DDI was the problem. 4e was designed around DDI and not the other way around, and when DDI came up short not only in its promised adventure tools but also the online Dragon & Dungeon they were hoisted upon their own petard.
So now they're trying to keep the brand from going the way of the dodo. They're trying to gin up the players with a new edition and an open playtest. If they were to try to keep 4e going on adventures they may get one or two published before the Hasbro Corporate Overlords shelved the whole brand. No books, no adventures, no DDI, nothing for years.
The existing DDI adventure tools are STILL by far right now the world leading product in its category. What else is there? However they could go an enormous way forward with them and what would make sense would be to continue incremental development. Turn your design teams towards producing a good line of adventures and your DDI team towards improving the ability of DDI to include and curate user-supplied content, make modest improvements to the tools in increments over time, add a few more simple tools like some things that support mobile devices and etc. It is HIGHLY unlikely the competition will match or exceed these efforts, and again Paizo has proven conclusively that selling PDFs of adventure paths is a lucrative business along with a rules supplement now and then. Eventually they could produce a '4.5' set of core books, add a way to deprecate old moldy content in the tools, and just continue to gradually evolve the game. They already made great strides with much better monsters and items. They can continue that. Some marginal classes could be fixed or retired, etc. The game can only improve with time, and with a re-release of core books they can refresh the presentation of concepts and guidelines, increasing its uptake rate. Heck, they can even make a few incompatible changes if they want to. They can even correct a few design issues like by establishing some pools of power source wide powers so that classes can be simpler and more modular.
Really, it isn't rocket science. I know they've shot this strategy in the left foot over the last year, but duh it was hard to think through! lol.
There's actually a huge reason why D&D will NOT go the way of the Dodo anyway. As with every edition from 2e onwards it is the novels and spin offs that make the money, and nobody is going to kill that goose just because core books are marginally profitable on their own.