Whither Paizo?

Recently, there’s been a lot of talk about whether or not Paizo will adopt D&D 4.0 for their future products. This isn’t the idle chatter you might think. Sure, the marketing juggernaut that is WotC will make it appear like everyone and their grandmother is flocking to the new version of the game, but I recently learned that an astonishing number of AD&D 1^st edition players never migrated to 2^nd. I can’t remember the exact number, but I asked Mr. Dancey about it directly over at the Fear the Boot forums. I want to say something like 50% of 1^st edition players never converted to 2^nd. The whole point of the OGL was to create so much new content for 3.0 that there would be something for everyone, and nobody would be able to ignore it.

The problem now, of course, is that a lot of different companies have a lot of work invested in 3.5. A lot of players also have a lot of money and shelf space devoted to the current incarnation of D&D. Will they convert to 4.0? Why should they? A certain amount will, due to momentum. And 4.0 might bring in new players. But what if the new edition causes the market to fracture further? What if D&D players decide that 3.5 is a better game? What would happen to the market? What would happen to WotC and D&D?

As for Paizo, I think they should just bite the bullet and go True20. ;)