There was a middle way. They could have gone the 4ed route of again abandoning the OGL. Maybe make a new GSL, maybe rely on DmGuild licensing only. With the curent market position and without the other factors dooming D&D4ed I think this might had a fair chance to work. Creators would have flocked to it, even some accepting the risk of the royalties. Wizards could have suggested their OGL-1.1 terms (possibly without the grant full use clause), and people would have happily taken it. Wizards would still be a company with a track record of fair business dealings, and hence a potential reliable partner. Getting access to the updated "true oneD&D" would be enough carrot, as the current huge pool of causal gamers would likely have followed without thinking.