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Reach failed because Bungie sold out, they catered the entire game completely towards casuals to get as many initial sales as possible because their contract was going to be over. They abused Halo's name and the reputation its gained through the years, again to get more sales.
Well how is getting a bigger player base bad you ask? It wouldn't be bad (in fact it would have been a good thing) if the game actually held your interest, was enjoyable, had replay value but it doesn't do any of that.
It failed as a competitive game, it failed as a casual game because there are better casual games out there and it failed as a Halo game.
Reach is not getting any new fans, it chased away a crap ton of its old fans. Bungie got as many initial sales as they could and didn't care what happened to it because their contract was going to be over. Its a "nice business move" for a company that will no longer be in control over their IP anymore.
They sold out, end of story.
[Edited on 12.07.2011 12:50 PM PST]