I see the growth of Paizo is a result of WotC pitching their products back at their mainstream audience, the casual player. 3e is a good game, it brought in hard core gamers who previously didn’t play D&D, but it’s also a complex and time consuming one. For a while, everyone was happy, however, in time casual players started to complain, not that 3e was a bad game, they simply didn’t have the time or commitment to make it work. This has been the main driver to how 4e was designed. Unfortunately, this process left a rump of disenfranchised and angry hardcore gamers who were the main beneficiaries of the 3e era. Paizo has quite happily stepped in to fill the needs of these players. This model works in many areas, the big multinationals sell their products to the mainstream, smaller companies thrive catering to the specialist, niche and connoisseur markets.