While competition can encourage one to improve, it isn't necessary. That Pokemon is where it's at now is entirely on them. Plus even if Tem Tem did get as big as Pokemon, as long as Pokemon remains big they still have no reason to change.
Sw/Sh is selling as great as any Pokemon game, doubtless kids make up a big chunk of players. I think they and their parents care more about brand recognition than the quality/value of the product.
no doubt Sw/Sh is selling well but i doubt kids is a bigger chunk of it compare to let say gen 3. Most of the people i know including my self who bought Sw/Sh are on their 20s or 30s... my friend's kids however dont care about pokemon other than the tv show and cards... but yeah i hope GF would get it together and i still would want a competition for it.