New York theatergoers, in effect, no longer possess Broadway as a venue for seeing plays; it belongs to the ultra-rich and the tourist trade. This puts Off-Broadway's nonprofit institutions in an awkward situation. They would like to take risks, to test works that are untried and perhaps unready, to let novice writers and directors spread their wings and perhaps fall flat on their faces. But their own ticket prices, like their expenses, go up every year. Their audience—the dedicated New York audience that, in decades past, used to check out new Broadway shows from the cheap seats—demands the satisfaction of a fully achieved work. Prestige-hungry boards of directors and hit-hungry commercial producers waving enhancement dollars hover over their season planning. The pressure is endless, the time available for pondering nil, the situation wholly untenable. No wonder such theaters produce many more mishaps than triumphs.
I don't exactly see how this is "untenable." Right now, there's a shift in Off-Broadway towards the same sort of slick, commercialism and popularity that Broadway has to offer, only at prices that New Yorkers can afford; the same, but for local audiences. Ken Davenport and his works are a pretty good example of this, and you can see the effect of this in the fact that Broadway hits are testing out the idea of moving Off-Broadway, rather than the other way around; Avenue Q did, and so did 39 Steps.
As demand for fully-realized Off-Broadway works increase, the barrier to entry Off-Broadway will increase. Pretty soon some pretty good companies Off-Off-Broadway won't be able to get "Off-Broadway." So they'll create their own venues. And then there'll be a division between Off-Off-Broadway and the real amateurs. So we'll call it Off-Off-Off-Broadway. It'll take place in Battery Park -- so Downtown that it's almost in the Atlantic.
Anyways, my point is that this is the process that birthed Off-Broadway to begin with, and then birthed Off-Off Broadway. And if the persistent decrease in Broadway's audience continues, one day we might just decide that Off-Broadway is just Broadway, that the old Broadway can be put to death, and everyone will pull one of the "Offs" off their business cards.