I'll agree that they're totally over-saturating the market. Guitar Hero is like the Starbucks of the video game world. There's probably going to be a small bubble bursting of some franchises but that's the great thing about video games. When one franchise goes it's rarely going to crash the whole market. Id, Bioware, EA, 2K, Faraxis, hell even Lionhead are probably going to live. Nintendo, Sony, and Microsoft are going to come out smelling like roses.
What I think is happening (despite market spamming) is that the gamer generation is growing up, like I said earlier, we're not kids anymore we can't devote the kind of obsession we used to (the average person mind you) so I think the market is just reacting to how much time the (average person) player wants to spend playing a game.