I doubt anime itself will end up declining. I mean, I became interested in anime in 2006, back when Eureka seveN, Fullmetal Alchemist, InuYasha, and even Gundam Destiny used to play english dubbed on the television every Friday night. Pretty much all of those anime were older than the year 2006, so I think that the fad of anime itself won't die out because the amount of anime in the world, old and new, is colossal. I've been watching anime from the 80's within the past few years, myself. Now, I can't say anything for newer anime (and I agree that after 2005/2006, the industry began its gradual downfall in terms of real anime gems) but it seems to me that the anime nowadays is almost focusing on:
1. Animation (prettying it up far too much).
2. Plots based on manga plots.
I have always found myself drawn to anime that has original plots: plots that the studio themselves have thought of, rather than a mangaka. (For eg., two of my alltime favorite shows are Eureka seveN and The Vision of EscaFlowne.) Also, although shiny animation is normally a good plus, it can't be heralded without a decent plotline (one shining reason why I can't stand Princess Lover.)
I was having this conversation before with a few of my friends (and even with an English Dub Voice Actor, online xD) and it seems that we all have the same opinion. Anime should figure out what it is they did when they made such great old classics, and then incorperate it into the new stuff.
AMVs, on the other hand, haven't really seemed to go down all that much in my opinion.

There might be a lot of Naruto and Bleach ones etc., and there's probably a zillion AMVs with the same song, but I don't like to compare old AMVs a lot. Its the work of a fan, so they should at least get some praise.
I feel the same way about comparing old anime to new anime sometimes, but the difference is how much confidence they have in making the anime. They have to be extremely confident to invest an idea in order to turn it into an anime. AMVs don't really rack up money, so its just different to me.