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Splashy effects and eye candy might dull a sense of believability, but a good story will always hook the viewers, regardless of special effects or anything else that's superficial.
Year after year, you get your campy summer blockbusters, but how many of them are acclaimed as legendary classics? Very few. Heck, the only special effects blockbuster to win an Oscar was Lord of the Rings, and even that had the powerful, compelling story to drive it. In that film, the effects were used as tools, not as selling points.
I don't think it's this splashy stuff that has numbed us from buying into it; it's more of lack of effort and logic in the product itself. I remember around June or July, when it was pretty blatant that the writers weren't trying. We all remember dropped storylines, ignored angles, heel turns that never stayed... that kind of stuff insults the audience's intelligence, so why SHOULD we buy into stuff like that when the people producing it don't even buy into it?
That's what takes a company down. The little things that hold the gears together. Not general, superficial "causes" like the internet or technology. Stuff like that is just a convenient scapegoat for people who don't want to take responsibility for their own failings.
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