
Just because publishers declare a genre is dead, it does not mean the truly rabid fans of said genre have given up on it. It means the readers who were reading the genre because it was the 'in thing' of the moment have moved on, yes. But the readers who adore paranormal or who covet vampire porn for their vacation beach read are ALWAYS going to go looking for those things. I loves me nothing quite so much as a skillfully written SFR - which - if you take a quick gander around the paperbacks being released by NYC houses are in short supply. As in: There are zip. NYC drove one of my very favorite authors right out of publishing until recently when she came back shields up and all phasers firing. You guessed it. She went indie. And that's the lesson.
No audience ever totally evaporates. The pond just gets a little smaller until the next lightning strike of 'new and in fashion' hits and readers rush in from the last fad. Core readers of every genre have long since learned not to trust their reading pleasure to the vagaries of the traditional publishing houses. They go hunting for what they want among indie authors.
So if you have your heart set on publishing through a traditional house, you are subject to the dead genre clause - if what you write is something they believe they can't sell because GENRE, you are SOL for a few years until the pendulum swings back in your favor. But if you've written a book you love in a genre everyone tells you is dead? You certainly have the option of self-publishing that book and of feeding the core readers of that genre. Keep that up and those core readers will follow you just about anywhere.