I'm A Banana
Potassium-Rich
An RPG company doesn't make money if it doesn't keep printing books, no matter how well previous books might've sold.
I think I should mention that WotC is changing this, with the DDI.
Like in the "5e" thread, I mentioned a model like Flat Earth Publishing, where you essentially assemble your own book out of bits and pieces of other books online, and then Print-on-Demand, would be fantastic for this. Maybe WotC could host files from a score of individual DMs and gamers, institute a ranking system, and have individual players and DMs assemble setting books and rule books for their own home game, completely customized for their unique D&D experience, be it rules-heavy or setting-heavy or adventure-heavy.
Basically, I just want to make the point that while this is 100% true now, there is evidence to suggest that RPG companies are trying out new ways of not depending so much on book sales, be it the Pathfinder subscription model, or the WotC DDI model.
So niches might get better filled in the future.
For me, the idea of "bloat" is a practical consideration.
A D&D campaign takes about 2-3 years to play from level 1 to 30, at a pretty brisk rate of advancement (one level per month, give or take). For that duration, I do need a lot of monsters, a lot of magic items. I don't need a lot of races or classes, or a lot of settings.
But, as always, I need a lot of options to choose from. Even if I only use 25% of the given existing races in a given 2-year span, having more options improves my ability to deliver a creative and enjoyable game.