much like a slot machine, they need to show a certain level of payout to maximize the number of players. There will always be a few who are desperate enough to invest hundreds of thousands on horrible odds, but the Caribbean as a group depends on a better rate of return than this. If the rate of residency placement drops too low, the smaller players will quickly fall out of the picture. At the end of the road, if the rate reaches single digits, it will be hard for any to stay afloat.
Also bear in mind that two things are working against offshore schools. Not only fewer residency seats going to IMGs but also the qualifications of applicants. as the number of US med student rises, more and more people who would have previously needed to apply to the Caribbean will get into US schools. So assuming that that's the top x% of the Caribbean applicant pool, then the entering stats of Caribbean students will be dropping each year. Having a less and less competitive student body at a time when things are getting more competitive is the recipe for a death spiral.
