Consider this: What kept players more engaged, First Ward or iTrials? I'm sure most subscribers took an alt or two through First Ward, but iTrials were consistently forming every night.
Keeping in mind that I'm probably not the typical gamer most MMOs are aiming at: I enjoyed First Ward more than I enjoyed the iTrials.
The iTrials felt like a grind to me the minute the first cutscene ended. They were only very loosely tied together with any sort of story and that story was not obvious. (I'm still a little fuzzy on how they all fit together even after looking it up on the wiki - and I helped record some of it.)
First Ward and Night Ward, on the other hand, I played through with several characters. There was a very prevalent story being told there, and I played through it multiple times to go over the details and see what I missed.
By contrast, the carrot on a stick approach other games take repulses me.
Take for example SWTOR. I played through the game the first time with a Trooper. What did I enjoy the most? The stories. Combat was just a way to get myself to the next bit of story. I didn't care about gear, PvP, crafting... just the story. My second play through was on a Jedi Knight. I really enjoyed seeing my Jedi's story arc unfold. And I really started to hate running around and fighting. Eventually, I just got so tired of the fighting that I didn't even care if I saw the rest of my story arc. The same was true for every character class in the game (I had one character for each so that I could play through each story.) The burden of combat eventually became such a weight that I just left the game. When I let my subscription lapse, I had only played through my trooper's arc to the end, 3/4 of my Jedi Knight's arc, about 1/4 of the Smuggler arc, and a few levels worth of my Sith Warrior. The other classes, I left almost completely untouched. (I played through the first part of the Bounty Hunter in beta, but never got around to replaying it after the game went live.)
After six months, I was pretty much done with SWTOR. CoH kept me around for 8+ years.
I get where Matt's coming from. Fewer player customization options, more concentration on end-game content, and a drive to encourage players to stick with only one or two characters certainly means less resources necessary for development - which leads in turn to better turnaround on profits for the accountants - but if I want to bore myself with a pointless grind, I can just go outside and mow my lawn again. I'm pretty sure it grew a little overnight...