Production pipeline problems.
Their main problem is that they insist(ed?) on having a single unified team for everything WoW. The same team is simultaneously juggling patching current WoW, producing the next tier of raids/dungeons/storyline, producing the next expansion, and pre-producing the expansion after that (although the latter involves very few people overall - but they've always maintained they're prepping the expansion after while working on the next expansion).
SOE managed to produce more than one expansion a year on average because they decided - if I remember right - to use an alternating two-team system. One team would produce an expansion, then maintain it when it was released, while a completely independent team would tackle the next expansion, so you had two teams alternatively producing then maintaining EQ. What you lost in communication, you gained in efficiency because your team was fully focused on one thing, and one thing only. The maintenance team also had one or two zones max to finish after releasing the expansion; sometimes not even that.
Blizzard's way might sound good, but we've seen the effective result: your team can't handle the simultaneous release of new raid tiers and outdoor zones, and working full steam on the next expansion. They put the last tier on PTR, fix any glitches, then switch to expansion building, which requires those nine-to-twelve months of zone/dungeon/intro raid design and production before the product enters beta.
They've announced that they had to restructure their team and bring new resources up to snuff for WoD; I suspect they redesigned their production pipelines with the hope of a more parallel process.
