My experience as a WOTC delegate has fewer kids entering the hobby. It has been months since I introduced someone new.
I've introduced three people to gaming over the past year, the oldest being mid-20s and the youngest around 14 or so and female. I think there is plenty of potential for new blood, it just has to be cultivated by an active community that is willing to reach out. I know a few dms who actively
dissuade young people from joining their groups because they don't want to be troubled with what might be perceived as immature play.
I still think that the supply/demand arguement is very much relevant. It's true that there are fewer publishers out there, but those that remain not only have to compete with one another, but also with
everything else that has been published for 3/3.5. For example, if I want to run a published adventure, I start by flipping thru my stack of
Dungeon magazines, then through the modules on my shelf that I haven't yet run, THEN I might look around for something new. The same goes for other material.
This isn't to say that new material is particulary good or bad, but that one has to consider the total of gaming STUFF that is out there, past and present, when considering what a publisher is up against, not just present competition.