@Red-Supernova  
It was part of it.
 
And they tried selling new characters with the School of Friendship. It didn’t work out that well given the mixed at best reception of season 8. And the next season was the last so they had to be put aside to wrap up existing charters stories. They never had a chance to resonate.
 
The existing characters were too fundamental to the show for it to properly support new characters. If you’re going to change the show enough to support them you might as well make a new show which is what they’re doing with G5.

@Incursor  
So the reason is because we didn’t buy enough of the merchandise? Are you sure?  
Why not sell different characters?

@Red-Supernova  
Just because we’re fans of the work doesn’t mean we care to buy the merchandise. Declining sales is one of the reasons it ended. Season 3 was supposed to be the end but it did extend it’s longevity to 9, this is simply the limit of that. There’s only so many ways you can sell the same characters before running out.
 
@Background Pony #44BC  
They were told to wrap the series up early in production of season 7, long before the students reception could influence this.

@Mirror Star  
Well I haven’t studied much about what goes on inside an animation studio so I guess five years in there could translate to an even shorter amount of time. Still, you’d think the toy sales and amount of bronies buying their products would be enough to extend the show’s longevity.

They realized nobody gave a damn about the students.

@Red-Supernova  
There’s only so much you can do. It may seem like a lot of time for us but it might not have been for them given the mountain of ideas they already had before they made this plan.

@Background Pony #E801  
They could have used those five years to see if FiM was still important enough to continue and make their decision once that time was reached.

@Red-Supernova  
Hasbro said they wanted the show to continue 5 more years in 2014 and to wrap the series up early in planning season 7. How would they not know there would be no time to do anything worthwhile with it?

I actually would’ve love if the Treehouse of Harmony was used more, could’ve made for some interesting stories.

It would have probably been used more in the show if they had, hmm I dunno, MORE SEASONS?

A student spin off show would have been terrific.

They let it live because they couldn’t bring back the library?

Because the show didn’t have the balls to really kill the Tree?
 
Why else have it if they didn’t even give it a toy?

It might be used in the season 10 comic. After all, we know that the Young 6 get their own glass tapestry.