Should WotC support more than one edition at the same time? Or will this just make the problem worse?
I will come back to the support part....
You cannot make the situation better the direction they are going, as all new thigns will cause even more fragmentation. More fragmentation will mean the number of new players will at some point no longer be greater than the number of old players lost.
It will make the problem worse from a sales POV, and that is all that will be viewed. They will be competing with themselves and find people will not be buying the newest and most expensive products that jsut required people to create. For the gaming community it might cause an upswing and overall market share increase for the D&D "brand". Why use a retro-clone when you can get the real thing?
Which brings us back to the support...
Depends on the level of support. You can no longer work with one Forgotten Realms, and only have what 100 years of play out of old editions thanks to the spellplague? So you have painted yourself into a corner there. Any other setting that has been taken forward would be pretty moot.
The most needed thing would be to have all editions on sale in some form for the core game. Original Red Box return and discontinue and apologize for the 4th edition one. Both on the market at the same time will serve to help no one with the instant confusion that will be had. Rules Cyclopedia would be better for OD&D, but they re-used that name too...so they screwed themselves there. They would have to label the books properly such as 2nd edition did but WotC stopped doing. So the front cover of ANY PHB needs to carry a BIG number on it to tell which edition it is. Make a Rules Cyclopedia for each edition even. OD&D pretty much use the existing one, 1st, 1.5, 2nd, 2.5, 3rd, 3.5, 4th, 4.5*....
From here to support all, you ned to decide direction. 4.5 is the new version they are putting the most effort into, so releasing new material for it with powers or whatever in it should be the most supported same as any 5th edition that may come about to cancel the heavy support for 4.5 when it was the newest product.
For older editions you could make adventures. People have been talking about the Shadowfell adventure being run in older editions as well many other adventures, so people love adventures. When using a standard monster, probably all you should use, refer to the proper RC for each edition and let people get it their, but include the proper monster for each edition. Appendix A What to use from what edition. Most of 1st~2.5 would use the same stuff. NPC you have to write up a bit for them.
Fluff and generic crunch. Many people looking for some kind of realism want to buy a product for things like the recent mining operation thread. Discuss mining conditions in medieval society roman, whatever the focus, have a conversion chart from edition to edition to tell how much money converts too OD&D to 4.5, and give prices for things so that people could use them in ALL editions of the games from one book.
Material that spans editions well sell better, even to those that do not play the game. So that example of a product would be something maybe D&D players buy, but having conversion between all editions possible, other games players might pick it up if they have need and can easily use their conversion methods form edition X to their own game directly from the book.
So if you make things for the current edition so be it, as long as some of those things can bridge and be backwards compatible and you have the core rules for the game out for all editions you should gain a stronger market share, and even people hating edition Y could discuss happily adventure G because they both played it even though they used different editions.
Also to support if you could figure out a price or percentage for each product sold, create an FGL as opposed to OGL. FGL, Free Gaming License, where you CAN use the name, but only to refer back to the Ruies Cyclopedia(s) for the proper edition (like with a bibliography or index of where to find the used copyright parts like "Illithid"), then you could have others support the older editions for you and just collect monthly from what Pretty much collecting royalties on the IP but only allowing the use of maybe a black and white version of the editions logo with something added stating it is form a 3pp and not made by WotC but WotC owns the rights, and again only the names of things like "Illithid" and referring all other information about it to be gotten from the Rules Cyclopedia. People could make items, monsters, adventures.
So many ideas how to support it and the OGL method worked to an extent, you just need something like it where people cannot make their own games outside of what the 3.x OGLs already does.
In the defense of 4e's designers, I think this is the first edition where someone drew a line in the sand and said "This is what this edition of D&D is about, and we're sticking to it." They gave Fourth a razor sharp focus and built the rules and content to support that. It's an edition with very little compromise.
The problem with razors is, when you play with them, someone is bound to get cut.
Didn't TSR try to support the various D&D-versions at the same time and then went under?
No actually. While supporting both version of AD&D and releasing RC, was not what caused them to go under, there were MANY other factors outside of D&D, and when moving to 2nd edition AD&D only supporting too many settings was one problem with D&D that added to the other problems the CEO caused that were bigger and not related to D&D itself but other areas of TSR.
*4.5...whatever you call whatever is after the original 4th edition as in essentials/red box, etc... i jsut followed the same old numbering pattern.