There are a lot of people writing. A lot as in thousands, hundreds of thousands. In 2008, around 275,000 books were published by traditional means, and a few thousand more than that through print on demand and other venues. That's over half a million new books in one year. If you're a writer, especially one who's not traditionally published, that's sobering news. Basically, the market is glutted and there are probably not enough readers to sustain the industry as it now exists.
Is this a bad thing? Well, if you get paid to write then it might be, and if you're trying to get paid to write it almost certainly is. There are only so many seats at the table, and when there's more good writers (and I believe there are tons of good writers, contrary to the mostly self-serving, emotionally fragile, and territorial opinions I've heard recently) than there are deals to give, it all devolves into Who-Do-You-Know? And when the answer to Who-Do-You-Know? is nobody, the next logical question should be Why-Am-I-Doing-This?
It's an important question, because the odds are you're not going to make it as a writer the way you thought you were when you thought this gig was such a great idea. It's something we all have to deal with, but it can be liberating when you find the answer- your own personal answer. Because all great writing is created from a personal vision, and in the absence of money, prestige, and all the other trappings of the ever more distant and largely illusory publishing dream, your inner vision is all you have that's worth a damn anyway. Me, I wouldn't sell mine out for anything less than six figures.