A report from Vivendi says that "this dramatic improvement was driven by a growth in revenues, with an increased proportion relating to the higher margin of World of Warcraft business". While increased development costs are also cited, it seems clear that a fair amount of the money pouring into Vivendi's pockets is staying there.
While players suffer from server and infrastructure problems, is this entirely fair? Well, publishers don't get into the MMO business to make losses. Without seeing a complete breakdown of where our subscription money is going, we're not placed to judge.