I think the SBG is alive for two key reasons:

1. WotR simply cannot do (and does not try to do) all that anyone with an interest in LotR gaming would want to do. The LotR includes some really exciting battles, that gamers love to fight, but it includes lots of skirmishes too, which we also want to refight. WotR can't handle that scale, so SBG is safe as long as GW continue to produce the models.

2. WotR seems to have some problems. I haven't played it enough myself to be very specific, but it seems from what people write in forums that there are vague patches in the rules that dramatically alter the way the game plays depending on how you or your group decides to deal with them. Until GW FAQ the game these problems will help prevent the game taking off more. The lack of a FAQ suggests that GW is not serious about supporting this game, never mind the SBG, and that is offputting to potential players. There also seem to be balance issues with some units, but I suppose that's nothing to be surprised about.

It seems to me the best thing SBG players could do is take part in narrative campaigns (which seems to me to be the strength of the system anyway, rather than point-match style battles) that include SBG games as integral parts of the plot, along with occasional WotR games.

I'm not very keen on some of the more recent supplements for the SBG anyway - Harad and Mordor were by and large not as inspiring as I'd hoped they would be - so if WotR diverts GW from going down the 'army book/codex' route for the SBG then I think the SBG will actually benefit.