Barsoomcore and I were talking at GenCon about this very question. He had a fantastic point.
What is it about D&D that draw us to it? Not just kids, but people in general.
Simply put, it's a game where you get to use your imagination. That's the draw of D&D or any RPG. And it continues to be the draw for all RPGs.
If World of Warcraft could completely supplant this need and make D&D truly obsolete, I would have quit D&D by now and gone into WoW full time. I'm not going to argue the point that many people have quit D&D in favor of World of Warcraft. However, has everyone done so? No, obviously not, because otherwise this website would be a ghost town.
And that's because as great as WoW is - it does not engage the imagination like D&D does.
As a school teacher, I often see my middle school students playing D&D. They come into D&D (like we did) from a variety of sources. Some are WoW players. Some are anime buffs. Some like to read a lot of fantasy. However, my students who are dedicated D&D players all have one thing in common - they all have vivid imaginations and like to engage them on a regular basis.
As far as being drawn in by the Red Box, I know students who start with AD&D 1st Edition, and then later switch to 3rd Edition. I also know many students who just pick up a D&D book from the local Barnes & Noble and start playing that way.
I often see or hear discussion about "what kids nowadays" are doing or questioning "what will draw kids nowadays to D&D"? I guess I don't understand why younger people are turned into some other species of animal that we have to speculate on or try to understand. From where I sit, the typical teen or middle schooler is very much like the teens and middle schoolers that I knew growing up. The T-shirts have changed. The music has actually not changed (many of my students listen to the same music I did). And instead of playing video games on an Apple IIe, they play them on consoles.