Something to consider here is that traditional home audio products such as AVRs and speakers are a shrinking market. It sucks, but year after year have seen reduced sales. Audio as a whole is not a shrinking market, but the stuff that we all have a passion for in here, good-sized speakers, big amps, sophisticated processors, etc., is not a growth market. I don't think it is dying, but I do think it will decline for a little while. One reason is that more people are living in urban environments, and not many people can really use a big hi-fi system in an apartment. I am sure other reasons include younger professionals getting killed by student loans and healthcare costs, and so on. Not as much expendable income.
Something else contributing to this is the increased complexity of sound systems- and its all for nearly nothing. look at all the acronyms that describe the feature set of any AVR made in the last 20 years, its alphabet soup, and not much of it is all that useful. How much better is a 7.1 system over a 5.1? its not huge. How much better is a 9.1 system or a 5.1.4 system over a 7.1? Not huge. 11 channels? 13? where do all these speakers go? And room equalization, which in many cases can do more harm than good? Like TLSguy says, a good, simple two-channel system is way better than complex 13 channel system made from mediocre speakers. But AVR manufacturers are pushing their cheap AVRs into trying to tackle more channels, thereby continually sacrificing quality for ever greater quantity. All these extra channels may have done more harm than good to the market as a whole by being intimidating and off-putting. And I bet that in an A/B comparison, most people would end up preferring the sound of a really good two channel system over a middling 20 channel system.
One more thing, I think its presumptuous to say how Outlaw Audio falls in this. All we have is one bad customer experience to go on here, and we only have one side of the story at that. We are not privy to their internal financials. There is an awful lot of conjecture in based on relatively little information. I wouldn't use one customer experience story as a barometer for how well an entire company is doing let alone how well a whole industry is doing.