One big reason why the subscription numbers fall is mainly because of boredom with the game, or people feel as though they don't have time for it.
It is why Blizzard has pushed for things to do other then dungeons, raiding, and PvP. Since I've played there's been, HM Dungeons/Raids, Scenarios, more BGs, more dungeons and raids, pet battles, arenas, rated BGs, and more. (I probably missed a few things.) It's the fact that people get bored of something they've been doing for years, even months. It's not crazy to think that in this day and age WoW, or any video game for that matter, can get old in how quickly we as people move to one thing to another to stimulate us.
If you want a perfect example, although two completely different games, Call of Duty and Battlefield. Franchises that are the "big nasty" in the FPS market have hit the same wall WoW has, were people are just bored of the same old same old. Truly if you look at WoW closely we do pretty much the same thing every expansion. We fight a raid boss, don't stand in fire, kill some people in BGs, gear up, rinse repeat. Some people this is tedious and old.
All in all I don't think Blizzard is stupid when it comes to doing what they're doing. Their target audience has always been the "average Joe", I mean this was the game that broke the ice for people to finally give an MMO a shot. (Trust me I played Star Wars Galaxies that game was intimating as hell in comparison to how WoW was back during Vanilla.)