I think the main problem was they expanded the amount of figures you needed to get too much.
The first game Sypro's adventure only had 32 Skylanders and they had three packs available that made actually getting them more manageable.
The second game Giants only had 16 totally new figures half of which where large sized. Having less figures to focus on kept it affordable even if the Giants themselfs where more expensive due to being bigger.
The third game Swap force had 32 new figures, Half of which where large sized. This made it way more expensive.
The forth game Trap masters is where it really started coming to a head. It had 52 figures! 18 normal size, 18 large size and 16 mini size. Not to mention the actual traps themselves and needing a special trap just for the final boss. This boosted costs enormously. This is also where I jumped ship because they screwed Canada over by not releasing the last few minis here.
The fifth game Superchargers had 20 figures and 20 vehicles. So less total then Trap masters but the problem being that they had no basic core size characters anymore. Superchargers where the same price as the large sized figures from the past and the vehicles where even more expensive. Plus you couldn't really ignore the repose figures anymore since you basically needed them to get the full use of their respective personal ride.
The six game Imaginations has 31 figures. Too bad they are all super sized making them more expensive then ever. Plus they have the creation crystals which are more expensive then the traps ever where and more limited to since you have to pick from 1 of 10 classes when making a character and then that crystal is forever locked to that class.
So basically the continued escalation of how much it cost to get a full set killed the series.