How do we know what the goals of those game companies were? Their goals might have been to just take a segment of the Warcraft audience. Blizzard managed to make a game where 10+ million people played it. They did it by catering to several different demographics. In order to keep pleasing everyone they also had to make the game increasingly generic. This has clearly upset some as we have seen over time on every fan site the continued gripe-fest.
By making a product generic, when something slightly better comes around with a comparable price people tend to switch. More bang for your buck.
In addition have you ever heard of a death by a thousand cuts? We maybe witnessing this with Warcraft. Each new MMO that comes out seems to be more focused at a particular gaming segment rather than a dev null catch all. China is showing us now that with the Age of Wushu Blizzard is vulnerable in the selected segment market.
As for the subs. I would not be surprised with patch 5.2 release being in that data caused a slight uptick. Even if it was 100k-200k subs. It looks better to say 1.3 mil lost rather than 1.5 mil lost. Another note Blizzard said they expect to lose more before the expansions end and we must remember this data is already 2 months old.
As for Blizzard monitoring players... just because you can watch what they are doing doesn't mean you understand why they are doing it. That is why focus groups observe then go in and ask questions. Blizzard is really only observing and then trying to infer what the player wants.
As for you claims of $150k a year. I would love to see sources and numbers. That seems a bit low.