Visit the pet food, potato chip, soda, cereal and toiletries aisles in your local grocery store.
"Competing with themselves" is what's made much bigger corporations than Hasbro very, very wealthy.
Hold on there. You have to establish that, in market dynamics, production and consumption, that these products are at all similar to RPGs. And guess what? They ain't.
For one thing, everything you mention there is
consumable. You buy it, you use it, it gets used up, and you have to go buy it again, at which point you may make another choice. All those items are also fairly low cost most of the time, so that buying something you end up not liking so much isn't a big deal. So, clearly consumption patterns are different.
The market sizes are also not comparable - there's about 140 million pet dogs and cats in the US. They all need to be fed every day. In the US, pet food is a $50+
billion industry. Snack foods for humans are a $60+ Billion dollar market. So, yes, those market can support many varieties.
For all that, Frito Lay doesn't have a multiple new flavors out on the shelves every month.
So, I call nonsense on that analogy. There may be an argument that WotC would do well splitting its production over several product lines, but this isn't it.