Well, it had to happen sooner or later! This week, it's back the late 90s for the game many people consider the Greatest Game that ever killed a genre. That's exaggeration, of course, but it does make for a good headline. The story goes that although the game did reasonably well--it was NOT a commercial failure, despite the pundits--it wasn't exactly the cash bonanza that LucasArts was expecting. End result--they pulled the plug on their adventure game development. Now you had a situation where the two greats--LucasArts and Sierra--were not making adventure games anymore. Of course, Cyan was still around, but nobody but me seems to count them.
Or, download the mp4.
Is this story fair? Nope. For one thing, it's well known that LucasArts was losing interest in EVERYTHING but Star Wars games at this point. Secondly, if anything really did compromise Grim Fandango, it was the fact that it was optimized for gamepads--yet only saw release on Windows! It's tragic (IMO) that it was not released on PlayStation and/or Dreamcast (released a year later).
There are also plenty of great adventure games that have come out since Fandango! Syberia, The Longest Journey, Scratches, Nancy Drew...And that's not even getting into many great imports from The Adventure Company, nor the endless supply of great indies! But anyway, enjoy the video.