The entire D&D D20 system is bloated with stacks and stacks of material, some good, some bad, some useful, some not. Regardless what WoTC is pushing out their door, there is tons of other stuff out there right now, so the question becomes what is WoTC putting out that is new or different that can be useful to a game. At this point I could probably find about 3 or 4 D20 equipment guids, at least 3 different magic and psionic systems, and there are who knows how many settings out there. At this point WoTC can only put out "useful" material that they kept at their own material such as mind flayers and beholders ( which they already did this book ), and material that can offer new feats, classes, monsters, and maybe even some rules, but eventually this well is going to run dry.
Its actually really simple, how many books do you own and how many books do you actually use in your campaign? I bet you will find that most people own many more books than they use, and that many of them will be slow to buy any new materials in the future. I know personally this is my stance on the subject, the lost WoTC product I bought was the last complete book, and right now I have no plans to buy any more, I have no need for them.
My working WoTC arsenal includes the 3 core books and the complete books (including psionics), oriental adventures (for when I'm running that campaign), book of vile darkness and thats it. Now I do own the planes book and the dieties books, but I mainly bought these just to read and skim for ideas, but these books never make it to my game table. As for D20 products from other publishers I use the Tome of Horrors I & II as well as Poisoncraft (a great supplement for anyone wanting to use poison in their games) and the Creatures Collection, Legend of the Samurai, Rokugan, and Creatures of Rokugan.
I don't really plan on adding to the collection unless some really good monster books make themselves present. As for optional rules, 3rd party prestige and class books, spell books, etc. I don't use them, they only seem to gum up the works and many prestige classes are not very well balanced. Optional rules throw off balance in most situations, though we do have house rules of course, and I find that most of our house rules are similar to the optional rules books, so they will never get used or purchased.
I know I'm not speaking for everyone here, as I know there are book junkies out there that have to have all the books, not that its a bad thing, to each his own, but its just not me. So I would say that WoTC will continue to put out books as long as people are buying them, and seeing that WoTC keeps pushing out material, I would say someone somewhere is buying the latest and greatest from WoTC and turning another dollar. When WoTC starts seeing a decline in new book sales I would say they will probably do one of two things, either slow down the amount of material they put out or stop completely, relying on the continued sales of existing works. Be warned though, when they stop making new books, don't look for them to just stop publishing. WoTC like any other successful company will look to continue and further the success of a franchise like D&D, and you can bet, whether you like to admit it or not, there will be a 4th edition when this happens, and this will be an attempt to recreate the success of 3rd edtion, by getting new younger gamers interested and rekindling the need to adventure for older games who may have tired of 3rd edition.
Taking this into consideration I would be really concerned when or if a 4th edition comes out, that type of thing could be a franchise maker or breaker, but until then I would think WoTC is fairly stable considering that pnp D&D is not their only game system nor is it their only way to seek profits, don't forget about D&D Online, and other WoTC titles in the digital world.
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