They have been around since at least Nintendo. The Power Pad on the Nes did have a game called dance aerobics well before DDR or Wii Fit & EA Active. Guitar hero type music games are newer, but as gfrancis said, can even play those with keyboards and there are lots of open source free rhythm games around.
I can see them not being as super popular as they were in the early GH days, but can't see them ever going out. Enough people have the peripherals, for this generation of consoles anyway, that it is fairly cheap to make these music games. Probably costs more in the licensing the songs then in the programming. Basic structure of the games hasn't changed in a while.
I think the reason GH and RB are bowing out is they tried to make it too big. Every time they got super popular and people actually shelled out for the instruments it was like a, WAIT, NOT YET, YOU DON'T HAVE THEM ALL!!! You have to get the keyboard now, and the DJ equipment!!!!
I don't think Music dance games are going anywhere because 8 year old girls will always be 8 year old girls. I think another company will come in and make some more titles under a diff name that are compatible with the periphs. I think the companies got greedy and instead of being happy with the market they created they kept trying to expand it. Can't sell many copies of DJ hero if everyone is fed up with buying yet ANOTHER plastic instrument.
You also have to give people some time to get bored with the songs. When GH I, II, and III came out there was enough gap that when the next game out I had gotten mostly 5 stars on all the songs, except the ridiculous ones that only 9 year olds in Korea can play. Once they started bringing out 2-3 a year of the main GH brand plus RB got into the fray, plus trying to introduce crap like DJ Hero, it was just too much. Was not enough room in the market for the amount of series and the speed at which they were releasing games. All because of greed. "Last year, Activision only sold 86,000 copies of the latest game in the series, Guitar Hero: Warriors of Rock." Because people were still playing and enjoying the older GH games they hadn't had time to get bored of yet.
Is it the end of RB and GH? Maybe, until someone licenses the names to make a new series, but it will happen. Whether under the old name with a new company, or completely new named series, it will come back. Lots of people have plastic instruments already, it would be crazy for a smaller gaming company not to step up into the void that will be created with GH and RB bowing out. And the longer no one does, and the longer people play all the songs they already have, the bigger the void will get. If there is a market, someone will try to take advantage of it, someone with much smaller overhead than Activision, Harmoix and MTV.
With the music games, Sports games and RPG's you are doing something you can't really just do. The football, guitar, swords, magic, whatever is in the game. With ballroom dancing??? hmmmm.
