Before it was nuked (along with the rest of his material on E2 -- per his request) kamamer
's write-up implied that TSR
went bankrupt as a direct result of its poorly thought out internet policies with regards to trademarks. From what I've read the prevailing view seems to be that TSR went bankrupt because of exceptionally poor management decisions in general
. While TSR did do an excellent job of alienating their hardest core fans, the numbers involved are just too small to dismantle a company the size of TSR.
My theory is that a more significant factor in the TSR bankruptcy was the anti D&D agenda of various well connected religious organizations and other mixed nuts (The 700 Club and BADD spring to mind). Although most of these efforts died in the early 90's, TSR never did anything substantive to combat the negative associations created by them. So instead of launching counter attacks in the courts or even an anti-anti PR campaign they sat on their thumbs repeating "there's no such thing as bad publicity" over and over. Nevermind the kids who had all their D&D books burned by religious fanatic parents! Forget the millions of mainstream parents who are learning from tabloid news shows that your product is somehow dangerous to their children!
When shows like A Current Affair and 60 Minutes create segments that seriously consider the idea that D&D might kill people or even just be "occult" it leaves an impression. To this day D&D is vaguely associated with satanism in the minds of most people. This is primarily because TSR vastly overestimated the existing public support of the brand and neglected to defend it from libel and slander as vigorously as it would later defend its precious trademarks on the internet.
This ridiculosity is easily explained: By the time TSR went bankrupt it didn't have the same management as it did in the 80's. I see the 80's TSR as managed by people who while they were in touch with their customers did not have a lot of management acumen. In the 90's however TSR management was crammed full of lawyers and other non-gaming suits who cared for nothing but squeezing every last dime out of TSR's assets. This also explains the torrent of mediocre to bad material published by TSR throughout the 90's (but that's an entirely different subject).