Well it's not going to happen this gen. The brand is just too strong. Battlefield 3 launched right beside them to go head to head. Battlefield 3 has sold 10 million units so far. And even with that kind of direct competition COD still broke their previous record, all entertainment records and is on track to outsell last years version(if they haven't already). You factor that all in and you get back to what I originally said: if this franchise is ever going to slow down(and I believe it will eventually) it's not going to be during this generation.
I agree with you here but as I've already stated companies will keep making them as long as people keep buying them. Certain titles get to a point where the brand name is actually stronger than the actual products and they start selling on name recognition alone. Even if the products aren't great they will still sell. You can say this about the Star Wars brand, Sony brand(all their electronics) and now you can add COD to that list. People don't even know what the next one will be called(Black Ops 2 and a space game have been rumored) or what the storyline and multiplayer modes will be. But they are still going to buy it and would probably preorder it today if they could.The problem with the industry right now is that sequels are the norm. Instead of having a sequel every now and then, we have one pumped out every year. The revenue result from a successful sequel is too much a draw for several companies now. In the past, we had a game come out and a lengthy time in between games. This helped generate hype and create demand for games. It just seems now that every year we are to expect yet another game from X franchise game, paired with portable X version of the game, combined with smartphone X version of the game.
I also wish series like COD, Halo and Assassins Creed would stop bringing out new entries every year but theres money to be made. And even if you decide with your wallet theres another 20 million people who will decide with their wallet the opposite way. I think next gen is the safest bet to when the annual releases will dry up a bit. But then again, they might continue even more. We just have to wait and see.