TSR crashed in part because it put out too many products that competed with each other. 3e and 4e put out a ton of products that could look intimidating to new players. It looks like a huge investment to get into the game, and it looks overwhelming to learn. 5e took a different path. Fewer rule books, and more adventures. To get into 5e, you still really only need the three core books. Xanathar's and Tasha's are good additions, but you don't need them. Compare that to 3e/4e/PF2, where there are new classes, feats, magic items, monsters, rules variants, etc., coming out almost every month. My son has a PF2 subscription, and the number of books they have put out is impressive, and they are good quality. However, I think a new player could easily be intimidated by the number of books with rules crunch, and bounce off it, especially as time goes by and more and more books come out. WOTC on the other hand, has had a lot of success growing their player base, while not cannibalizing parts of their business or having a huge stack of crunch books to deter new players. They are letting 3rd parties put out expansions.
Do companies need to put out new additions? I think a lot of the time the answer is yes. They are either losing popularity, or they are creaking under the weight of all their rule book and options. After a certain amount of time, your core books need to get updated with the best of what has come out and to account for things that don't work as well as originally thought. Finally, because of the strategy I mentioned above, DND does not need to come out with a 6e, they just need to polish and update 5e. People are still enjoying 5e, and the player base is strong. A new edition might upend this positive situation. An update or revision to the core books, using the same basic rules, and allowing your old content to still be playable seems like a good approach, and it allows them to improve the game after 10 years.
Do companies need to put out new additions? I think a lot of the time the answer is yes. They are either losing popularity, or they are creaking under the weight of all their rule book and options. After a certain amount of time, your core books need to get updated with the best of what has come out and to account for things that don't work as well as originally thought. Finally, because of the strategy I mentioned above, DND does not need to come out with a 6e, they just need to polish and update 5e. People are still enjoying 5e, and the player base is strong. A new edition might upend this positive situation. An update or revision to the core books, using the same basic rules, and allowing your old content to still be playable seems like a good approach, and it allows them to improve the game after 10 years.