The ending of the "The Secret of the Sword" doomed She-ra from the very start
I think She-ra got cancelled because by separating She-ra from He-man and her family, Filmation disenfranchised alot of the He-man fans. Also, the storyline so saddened children that they were turned off from watching She-ra and buying the POP (Princess-of-Power) toys.
I think the creators/writers of She-ra forgot that their target audience were little girls. They created an independent, strong woman and tried to market it to little girls. The concept would have been more appealing to adult women. Even Melendy Britt during a panel discussion at Power-Con said she played with the She-ra action figure more than her daughter and her friends.
Filmation squandered all the surplus revenue from He-man trying to push an adult concept (ie. strong, independent woman) onto little kids. Little children would have related more to the message of family togetherness, with He-man and She-ra acting as a team and complementing each other.
Filmation spent all of the half billion dollars made on He-man trying to push the strong, independent woman concept onto little girls. And girls rejected it by not buying the POP toys.
Little girls would have responded more favorably to the idea of She-ra living in a palace, fighting side-by-side with He-man, and embracing her role as a princess. I'm sure they would have bought the POP toys then.
Filmation already gave She-ra a better sword, more powers, and greater strength than He-man. All of this would have established her as He-man's equal, if not his superior. They didn't need to separate her.
Filmation should have built on the enormous success of Masters of the Universe by integrating the Princess of Power into MOTU and making them one.
Instead they created a separate entity and spent all the He-man profits keeping She-ra on life support for as long as they could.
What a waste!
Filmation turned their backs on their fans and what the fans wanted after they made all that money on MOTU.The creators of the show forgot who made them successful. And they basically just wrote what they wanted.
They made so much money off of He-man, they became arrogant and stopped listening to and respecting what their audience wanted.
So fans stopped tuning and buying the toys.
And She-ra got cancelled.
She was even excluded from the 1987 live action movie, probably because she wasn't family-friendly.
Good Story but Bad Marketing => No Revenue => Story cannot be completed
She-ra didn't aspire to ideal family values which is why girls didn't buy her toys in the numbers necessary to keep the show going.
I agree that nowadays families are different, but we all in our hearts still want to promote and see the ideal.
For example, even though the divorce rate is 50% we still want to aspire to and teach our kids that marriage is a life-time commitment.
She-ra would have freed Etheria if Filmation would have marketed the ideal to kids because then the toys would have sold.
Save the cold, hard reality for the adult programs and leave the kid shows like He-man and She-ra alone.
Let kids be happy and enjoy the fantasy of their childhood. Don't crush their youthful idealism.