Alan Wake and Modnation didn't bomb that hard, they're the 6th and 7th best selling new IPs this year (check the thread in my sig)
But I think the real reason games are bombing so much is mainly because people don't have money or because there's already been games released that they want.
For example, I want to get Uncharted 2 which is now about 20 euro; I also want games like Halo Reach, Fable 3, maybe Enslaved but these are all 50; so I'm going to buy Uncharted because I know those other games aren't going anywhere and I can pick them up later and for cheaper. Why should I buy new games full price when there's older cheaper games I want to play?