While I agree that you could make Baldur's Gate today, for quite some time it really did seem like the market for that sort of game was gone or was in the process of evaporating.
I know many PC gamers don't like to admit this, but 2001-2006 were dark times for the platform, financially. Revenue really was going down, and the "PC is dying" meme was not some absurd claim that only console die hards make; it was a rational, plausible scenario. The PS2 took it to the PC as a gaming platform pretty hard, with that single, lone platform representing something like 70% of the entire gaming market by revenue. Think about that.
But the PS3/360 have not stuck it to PC gaming nearly as hard as their predecessors did; PC gaming has been growing year over year since 2006 or so, often by leaps and bounds. Today, there is most definitely a market for games on PC, as Obsidian's Project Eternity testifies to.
But when Bioware made their shift -- a shift not only to a console focus, but towards a specific, non-BG style of design -- it was not crazy to believe that the days of BG-esque games were numbered. PC seemed to be on its way out. Consoles and dudebro were on the rise. What may seem like an obvious mistake now seemed like an inevitable conclusion in 2005.