Yup, it was the death of the competition that did them in. Up until then they had WCW and ECW to compete with. And before the IWC era began, you'd stick your face to the tube every monday night, whether it was RAW or Nitro, and eventually Smackdown or (lol) Thunder, because you knew they always wanted to upstage each other and at any moment someone could jump shit.
Now there's no one to jump ship. WWE won't let go of the guys who matter to them and if they do, they'll make sure to bury them in the process and hold them for that 90 day period. And TNA is filled with guys who probably wouldn't want to go back to WWE, or at all if they've never been, and if they do, they'll get brought up slowly through developmental if at all.
They need that competition again, but unfortunately there's no one to offer it to them.
And the death of ECW and WCW represented that, and having all those guys come in was the last big markout moment.