I think what ultimately killed Skylander's is a multifaceted answer, but I there there are 3 primary market pressure that did it.
1) The Nintendo Wii eventual death I think hurt the series tremendously as that was a huge casual audience machine that played this series. Some of those audiences did move onto other systems, but a large part went to mobile. Which mobile gaming in its self probably also lead to the downfall for the series.
2) Over-saturation of the toys to life market. If I remember right, there was a Lego, Disney, Skylanders, and Nintendo toys to life series going on. These toys started stacking up and I think that hurt Skylanders. Not just more competition, but more competition also made the market less interested in the toys to life concept as each did its yearly release.
3) Activision also over produce multiple of the toys resulting in massive losses on those through clearances. Also shelf space was expensive to buy and this series needed a large retail shelf presence due to all the toy variety.
So basically, it lost its audience due to the Wii dying/mobile and its audience getting to much toys to life. Then market realities made it inevitable.
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