Every other day, a new web-host joins the race. The numbers are kept in control, only by the fact that there are others who quit, or who are acquired by another company/person. New hosts find it harder to succeed, given the monetary investments and expertize it takes to succeed.
The most lucrative part of Hosting business is the repetitive nature of the income. Add to it, the additional/related services that can be rendered, which gives more profit margins. But the problem is that the market is highly competitive, and even the big players find it difficult to keep up with the budding hosts. That implies, smaller players have the advantage - The advantage of being small.