Lol, backstabed by the party's thief. Nice, this is why I think DnD gives paladins detect evil at will.
I am just one boy, but I have spent easily ten times more on tabletop rpgs in the last four years then the rest of my life combined.
My personal impression of D&D product, the rules of supply and demand are probably the main cause of any sales fluctuation. When 3.0 first came out, lots of people (like myself) bought every new book and suppliment that came out. Since there was so little 3rd edition product, then people are more thirsty for it and there is a demand. So then it made more and more releases come out, I mean there are a few new dnd products every month, compared to the start of 3.0 when the PHB came out, then 2 months or so later DMG, then another 2 or so months after that the MM. The 3.5 edition helped a bit, but mostly just delayed it. There are so many books now that people are way more choosy about what to buy.
Wow, how does this even apply to the subject anymore? Okay, well going back to the idea of supply and demand, if you want continued growth in the market rather than it just going stagnet and declining, then you have to get more competitive. So you need better and/or cheaper products. Here I think is where the pdf thing comes in, as you can oftentimes get a digital copy at 1/3 to 1/6 the cost of a hard copy. Also then comparing Palladium and other such books to WotC, with the hardback and artwork, obviously you have better quality. Since it's already been brought up in this thread, then I think its understood how much this can play a role in the current rpg marketplace. Of course, then there is the actual content which also plays an important part of overall quality, large enough that individual subtopics could merit their own discussion (such as errata).
Now when you also have to suddenly pay more for editors, binding, color print, artists, etc. then even if your sales are growing, the extra overhead might still mean less earnings. Anyway, this is mostly my explination of how profits in the rpg market could be down, when I think the gross is probably at a high (well it might have actually peeked a few years ago, I have no idea, but it has to still be way way above what it was ten and twenty years ago, or whenver Palladium started up).