MerricB said:
Incredible. About all the points about what's going wrong are pretty much what Wizards is *not* doing.
Cheers!
Rhetorically speaking, do you _ever_ come up for air?
Rant On:
More to the topic of the thread, like some others have said, I have found my game purchases dropping off sharply this year, although they decreased in 2004 as well. (My wife is good enough to track my game expenditures and at periodic intervals confront me with what I have spent. Bless her heart.

) In both years, I have simply found less to buy that grabbed my attention. I also noticed just less product on offer (John Nephew's point). If there is a glut of print products, I am not seeing it.
It seems to me, rather, that too much of the product on offer is a rerun of ideas that have already been around the block. E.g., Heroes of Horror? Been there done that. Forgotten Realms? The proverbial dead horse now being beaten for the umpteenth time and beyond recognition. Stormwrack? Let's see. How many sea supplements do I have/need? Only Eberron holds out any promise for something new/different.
While the examples I use are from Wotc, much the same goes for d20 publishers, albeit to a much lesser degree. D20 products are, in fact, one of the few bright spots.
Northern Crown (the first book anyway) was great. Liber Mechanus for IK was good to see. Legends of the Samurai is awesome beyond words.
It seems d20 publishers can still turn out top notch products not thematically done to death already, while Wotc hasn't had an original thought since Eberron. Oh, wait! Wotc had to get that idea off someone not at the time working for Wotc. Oh wait! Incarnum! Oh wait! Incarnum sucks beyond words! (See reviews of Incarnum, this site, for details)
If there is a downturn in the market, I blame Wotc as industry leader for not leading with better, more imaginative products. Spell Compendium? Yawn. Pact/True Name/Shadow Magic? Yawn. "More of the same only different!" That should be Wotc's moto.
Part of the problem, IMO, is Wotc's blind adherence to the "too many settings killed TSR so we offer you Eberron and the moldy oldy Forgotten Realms." This is a large load of bilge trowelled out by persons desparate to keep the spotlight on their fading place in the RPG universe and Wotc fellow travellers for whom it seems from outward appearances that "good enough" is "good enough" so long as they continue in their employment. TSR did not fail because it fractured its market with too many settings; it failed because it did not grow its market with those settings. With no growth, then, and only then, did all those settings fracture the market in a way that hurt the company. Wotc is correct not to follow suit only if they admit of no ability to grow their market with a new setting. That would be a sorry admission for a company that trades in the imagination.
New settings spur new ideas - E.g., Birthright, Darksun, Ravenloft etc.. By eschewing new settings, and unable to otherwise match the innovation of the d20 publishers, Wotc lowers the creative and imaginative bar with a desultory effect on the market. Like 'em or not, agree with 'em or not, Wotc is the market leader; they shape the market. And they are, IMO, boring the market to death.
I do not mean to dismiss all the posts that look to various socio-economic data to explain why there is a bit of a malaise. I think there are valid points there and there are certainly multiple factors at work. One of those factors I believe to be Wotc's hyper-conservatism as regards the imagination and the trickle down effect when its widely marketed products suggest same old, same old.
That Wotc is enjoying "record sales" with its strategy says nothing at all contrary to my point. The market leader is leading the market. Duh! Rather, Wotc's success butresses my point - they are shaping the market - with same old, same old conservative imaginings and wringing the excitement and energy out of consumers thereby. They are literally depressing the market for other than their cookie cutter, retreads of the imagination. Works for them as a business. Okay. For the market . . . As Wotc might say to the d20 market (has said with its eternal sunshine of the spotless mind posts) - "It must suck to be you."
Rant off.