Apparently that is a widely held myth. Magazine sales and reader demographics are still very strong. Magazine sales are $27 billion annually and readership has grown since 2008.
Physical books bring in $22 billion annually. E-books bring in $2.2 billion and has zero market growth. Claims that electronic media is taking over is greatly exaggerated.
I was about to jump in to say exactly this! The idea that "magazines are dead" is a myth! Just as much as "(dead tree) books are dead"!
Magazines have definitely taken a hit, like print books did, but have also seen a resurgence, a backlash if you will to the push for everything to go digital. It's still possible to put out a quality, successful magazine these days. Not that it would be easy. Niche magazines were hard before "magazines are dead", and I would imagine it would be even more challenging now. For WotC to avoid that seems reasonable to me, which is different from saying it cannot be done.
I would love to see WotC provide a new "Dragon Magazine" that worked a lot like Paizo's monthly adventure path booklets. Have it be a thick, hefty product, include an adventure and supporting articles, and heck, even include advertising from 3rd parties and promotion of WotC's own products. It would be very different from the Dragon Magazine of old, but I'd buy it! I'm constantly tempted to subscribe to Paizo's offering, even though I don't play Pathfinder!
I'd also love to see an official WotC service similar to ENWorld's EN5ider series of articles. They are like the old articles in Dragon Magazine, just without the magazine!
I will say that WotC's current digital magazine, Dragon+, just doesn't do it for me. It lacks substance, in my view.