Central Nexus has a good question up about the eventual release of Champions Online and its effect on CoX fans. NCSoft has built up a nice little niche subgenre with City of Heroes and Villains, and despite a false start with MUO, Cryptic is now planning to invade that space and try to steal back some of their former audience.
But can a niche subgenre of a niche genre support two audiences? Worst case scenario is that it can't, Champions will split the audience, and neither game will keep the subscriptions they need to stay alive. But surely Cryptic knows that -- especially with the planned Xbox 360 port (planned being the operative word there, since there's still plenty of time before release for that to change), they are probably aiming for an even bigger audience than the one they had with NCSoft,
Of course, as with most of the arguments of this type, it all comes down to gameplay. If Cryptic can do with Champions what they want to, and make players feel as if they're superheroes in a living MMO world, they won't have any problems with finding an audience. But if all they make is City of Heroes part 2 with glossier graphics, CoX fans might end up torn between the two.