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Mostly in response to the_logos, but probably broader:
1) I completely agree RPI is a highly specialized niche. There's a limited number of people who enjoy that sort of thing, which at times looks to be an attempt at simulation rather than a game.
2) When I have poked around them, I was surprised at exactly how, erm, dedicated the players were. I didn't think the character interaction was necessarily of higher quality than other RP-enforced games (if anything, it was excessively clique-ish), but there was a notable emphasis on small details of gameplay-- cooking food, acquiring the most rudimentary of supplies, etc. For some people, that adds to the immersion. For me, it distracted too much (*) from the things I do enjoy about games, and I went elsewhere.
3) IRE doesn't strictly make money on a per-customer basis. There's a sliding scale of fees where some people pay a great deal more than others. IRE makes money on the product of (players x chosen spending level).
What if the average RPI player was prone to be a much less casual player of MUDs? In other words, what if the type of person who (assuming they liked the product) typically spent 5x or 10x what you'd milk out of a low-immersion (RP-optional like other IRE games) game player? I'd suspect that the same people who choose high-immersion games would be more likely to play many hours per day and/or participate in the arms-race-spending model.
*: I'd consider the game I work on to be "medium-immersion"-- I think roleplay is impossible when some players can just opt out of it, but I also think that streamlining certain "realistic" features and replacing them with "suspension of disbelief" features is beneficial. As an extreme example, I'm not aware of any game which forces you to periodically strip down and go to the bathroom-- we seem to all agree that it's a realistic feature that can be streamlined out and declare bathroom use "off-camera".
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