Back before the Internet or even before SF was mainstream D&D was a huge fad. It was sold everywhere, toy stores, Sears, hobby shops and tons of people played. Heck what else was there to do in 1981 when you were a geek
TV sucked, and while art and whatnot was there and some of us had video games (go Atari 2600) and computers unlike D&D these things weren't social. D&D was awesome for bored suburban kids.
However like all fads, it eventually started to fade.
My best guess as for the fading time line are these three intervals,
#1 1989 ish with 2e splat books, at this point the model of the game had changed and it was moving from focusing on the DM as primary customer to the player. This made sense from a business POV but part of the "heart" of D&D was wounded as the game moved away from Old School.
#2 1993 ish with Magic and White Wolf. People played a lot of other games by preference and the CCG, Magic well it ate D&D for lunch.
#3 1997 with the Bankruptcy. The company was toast.
Now the release of 3e and the OGL in 2000 would give the game a lift That was about an 8 year boost that would help revitalize the brand till 2008 or so. Now it wasn't quite as big as the 80's but it was healthy and fantasy being in the mainstream and D&D players now having some editorial clout really kicked the game off.
That would last till 2008 or so when a combination of the world wide economic issues and some frankly strange design choices in 4e would start to shrink the market. I'd guess overall money spent was down on account of the economy and as a double whammy what money was spent was divided with Pathfinder. Ouch.
Now WOTC is making 5.0. How this will play out is anyones guess. I'll certainly look at it though but than I've read every edition. I am not sanguine as I smell design to meet impossible specs by a committee but the people working on it are very good and I may well be wrong.
No matter what I'll still dabble in Old School and if things don't pan out with 5e hey more time for 3x/Pathfinder.
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