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Horror will never die! :D
I haven't read the article yet, but I think that whenever a genre becomes popular with mainstream, you're bound to be flooded with formula-driven watered-down stuff. Big movie corporations want to put people in theater seats more than they want to make meaningful/interesting movies. That's their job - to make money.
That said, there's still good independent horror happening. Indie directors have way more freedom because they aren't under intense pressure from huge budgets. They can be wild, get crazy, cast talented unknown actors, cuss, be sexy, be bloody, be controversial.
In a roundabout way, I think that blockbuster horror movies are actually a good thing because they create more horror fans. Kids will go see, say, "Scream" with their friends. They'll decide they like that kind of movie, then start reading about horror online, in zines, or talking about it with friends. They'll find "Evil Dead", then maybe happen upon Dario Argento or Lucio Fulci, and their world will open up.
Fads come and go. I think that even when the big studios have moved on to the next big thing, horror will still be kicking.
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