In short, Blizzard beat out the competition, and a lack of financial return return or variety led to studios closing. I know people like to paint EA and Microsoft as the big bad guys who destroyed small studios, but the fact of the matter is the studios would not have been closed if they were seen as a major assets moving forward. The RTS genre stagnated badly in the early and mid2000s, a time when other genres exploded in popularity. Even today, RTS games require so much effort to achieve a solid launch, and the post launch opportunities are slim. Other genres are much more open than the RTS to dlcs and other forms of making money post launch. I think that is the major reason that sc2 is currently in the process of testing out smaller dlc type content packs, the days of high budget expansions are coming to an end, even for Blizzard.

For the genre to truly come back I think it would require a few things. First the genre needs to embrace a different pricing scheme. To me the obvious answer is free to play, but the difficulty comes in how that would operate. For warcraft 4 (if it is ever made) Blizzard could utilize the Hearthstone card collection in some form of pay to enter secondary game mode, or more likely they would base it off their current sc2 experiments. You can see Relic experimenting slightly too over the years. Company of Heroes and DoW2 had differing ways in how they dealt with expansions. Some were standalone, some required the original and some sectioned off units from the multiplayer game. The genre needs to be more accessible too. Even the more user friendly titles are overwhelming to many players, and the genre natively has a high skill cap with a steep learning curve.