The late '80s saw the launch of Forgotten Realms (still D&D's most popular setting), and DragonLance. The runaway success of those lines, particularly Forgotten Realms and its popular signature character Drizzt do'Urden, begat a slew of new world designs. There was the post-apocalyptic Dark Sun, the highly political Birthright, a response to White Wolf's successful Vampire: The Masquerade game called Ravenloft, and the extremely avant-garde Planescape, among others. Unfortunately for Williams and TSR, this strategy, while presenting the initial appearance of success, is actually a strategy for long-term loss. The marketing term is "Brand Extension," but Bill Slavicsekdirector of RPGs, miniatures and R&D at Wizards of the Coast, just calls it the "Many Buckets" theory.
"Picture it this way," Slavicsek says, "it's raining money outside and you want to catch as much of it as you can. You can either make a really big bucket or waste your time and attention by creating a lot really small buckets -- either way, you're never going to make more rain." In plain English, TSR, by putting out a lot of product lines instead of supporting the main Dungeons & Dragons line, fragmented the marketplace. The same audience was giving the same amount of money to TSR every year, which had taken on the additional financial burden of creating, producing, and supporting hundreds of products. It needed to grow the marketplace, and these brand extensions weren't doing that.
The many settings also contributed to something called "Brand Dilution." The original Dungeons & Dragons brand stood for something. You knew essentially what you were getting when you bought a D&D product. All of these new settings began to play havoc with the rule sets and philosophy of the game. As the settings grew more popular, they began to diverge from one another, advancing along their chosen philosophical paths, essentially becoming their own separate games.
In not too many years, players had stopped identifying themselves as D&D players and were instead identifying themselves by the setting they played in. A Planescape player was very different than a Forgotten Realms player, and their rule systems were beginning to become incompatible with each other. More significant from the company's point of view, though, was that players would never buy a product set in any other setting than their own. Far from catching more money in their small buckets, TSR was actually making the audience smaller!