Sure there was some over-saturation of ST in the 90's, but that wasn't it's only problem.
When TNG came out it had little competition in terms of space based Sci-Fi or even Sci-Fi in general. By the time DSN, VOY and ENT came around this was no longer the case.
But the real killer was the percieved lack of quality/risk taking etc..
Yes TNG bears some similiarties to TOS but there was a what 18 year gap between those shows. DSN tried something different by being set on a space station. Yet almost as soon as TNG was off the air, VOY another ship based show replaced it, which in turn was repalced by ENT yet another ship based show.
Now I'm not saying that VOY and ENT didn't have their moments, nor that I didn't enjoy them but it was more of the same old, same old. VOY got the nick-name of TNG-Lite, which could be translate as like TNG but not as good. Many fans think ENT finally got going and living up more towards it's premise in it's last season.