I think people just aren't buying every GH or RB game they put out any more. I'm sure we'll see a boom in sales at the start of the next gen, so the genre isn't dead. The problem is it's once or twice per gen game they try to sell to you every 4 months.
"Now, a fun game should always be easy to understand - you should be able to take one look at it and know what you have to do straight away. It should be so well constructed that you can tell at a glance what your goal is and, even if you don’t succeed, you’ll blame yourself rather than the game. Moreover, the people standing around watching the game have also got to be able to enjoy it." - Shiggy