What? DmC didn't bomb. It sold 182k on PS3. MGR did 470k on PS3. Action games are still well and alive. Ninja Gaiden 3 totally bombed because no one in Japan really cares about Ninja Gaiden. The series never did well in Japan.
Hmm, the genre isnt dead, but i dont think its "well and alive", making an action game is still a risk imo, Ninja Theory games dont really sell that well, neither Ninja Gaiden, Platinum games mostly are funded because of their quality, im not sure if i can count Dragons Dogma, but that didnt set the world on fire either, God of War Ascension also sold below expectations, if im not wrong, Darksiders also bombed.Of course, there will always be an audience for this kind of game, but very few big ips.
Unless you are talking about Japan
then they did well for that market on consoles, i wonder how well much a character action game on a handheld coul do?