They probably didn't think merch sales would be effected by whether or not the movies did well. When you rush to kill of beloved characters and replace them with more bland versions, it back fires on you.
Should've just gone with the Old Republic
I know this has been discussed a lot on here, but Star Wars makes sense on paper for a Potter sized land. However, in a weird way, it's strangely difficult to create a giant land based around Star Wars.