Of course the managers/executives making/approving decisions like this know it's a dangerous game, but it's not dangerous for them because they know IBGYBG[0]
They have no "skin in the game"[1] meaning the incentives are all wrong, how do we expect them to behave any better?
There's going to be some inertia. You can recycle old content to mix with the "native advertising" spam that will fill the vacuum left by the people who used to "produce the majority of the content" - it's not a long-term solution, but if it keeps the user bleed in check until IPO, then the C-suite and the investors win; afterwards, the site can go to hell, it's not their problem anymore.
Someone who, like the GP says, uses third party clients and ad blockers, who is very technically knowledgable, who may even use Reddit's API directly themselves, or write tools/clients for Reddit.
Contributing to Reddit's content doesn't require any of that, and I'd wager the overwhelming majority of Reddit users don't do any of that but do contribute most of Reddit's content.
Just because you're a content creator doesn't mean you're a power user. The concepts are mostly orthogonal. Though if you're a mod you probably use some mod tools, which makes you a bit of a power user by definition. But mods are a tiny minority of Reddit users and don't contribute most of Reddit's content.
Of course the managers/executives making/approving decisions like this know it's a dangerous game, but it's not dangerous for them because they know IBGYBG[0]
They have no "skin in the game"[1] meaning the incentives are all wrong, how do we expect them to behave any better?
[0] "I'll be gone, you'll be gone" [1] https://en.wikipedia.org/wiki/Skin_in_the_Game_(book)