Mannahnin
Scion of Murgen (He/Him)
Well, a big part of the issue is that TSR got a lot bigger than they could feasibly be.TSR got about as big as it could feasibly get being, essentially, a niche book publisher, and post-1983 they milked that with a variety of strategies that were all essentially kicking the can down the road until their eventual collapse.
To this day, Hasbro is trying to figure out how to leverage D&D's brand recognition to turn them into more than a glorified book shop.
When they ballooned their payroll to 400+ people and insane liabilities and overhead. A fleet of company cars, contract and stock-option buyouts to executives they pushed out the door, swallowing that giant loss on mis-sized boxes ordered by a nepotism hire for the Fantasy Forest board game, huge amounts of royalties to Gygax, etc.
And after Williams took over they SHOULD have been plenty profitable with the massive success of their fiction publishing side, but they kept shooting themselves in the foot with failures of cost containment (overproduction of boxed sets not priced highly enough) and lack of voice of the customer/production flexibility due to the Factoring Agreement, so they overproduced stuff that didn't sell, and couldn't adjust in time to capitalize on products which were hits. Or sabotaging their lucrative licensing agreement with DC Comics when they tried that silly Comic Modules venture with TSR West. Or how they alienated successful writers like Weis & Hickman, or Salvatore, and drove them out the door.