I mean the niche best known for Bethesda's The Elder Scrolls III, IV and V.
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(Fantasy) The setting is a fictional world with fantastical elements, and a comparable level of societal progress as the 1600s or earlier.
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(Character Creation) You create your own role: character and class. It is a permanent character.
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(Action) You have direct control over your characters actions in real time.
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(Open World / Sandbox) You aren't forced to do the main story and can roam around the whole map finding items and doing side quests.
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(Single player) Not having to accommodate for multiple players, your choices can make a lasting impact on the world.
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(Alive world) There are events that can happen by chance, like meeting people on the road.
Less importantly, they are first person. This connects you more to the character, but downside is you don't see how cool armor you are wearing. First person combat might also keep it from reaching high action potential, although games like Mount&Blade and Kingdom Come Deliverance features good First Person fencing.
What are the competitors in this genre of single player, open world, fantasy, RPG?
Baldur's Gate is not an action game.
The Witcher forces you into a premade character and thus I don't consider it Free Role Playing.
Kingdom Come Deliverance is not fantasy and you are a set character.
Elden Ring has few NPC interactions, choices and well executed quests. The world is heavily hostile. I don't see it fulfilling the niche quite, but it fills my craving per now.
With Oblivion and Skyrim being real hits, why aren't there more competitors in the Single Player, Open World, Fantasy, RPG niche?
Because it is hard to make them. They require a lot of assets, a lot of development time, a lot of writing, etc. Bethesda dominates the genre because nobody else wants to take the risk to pay developers to try for something that might be really expensive and bring back little return. And this particular genre is a nightmare for solo and indie developer teams.
Indie and solo developers want to make a game in this genre, but its unrealistic to expect any will be successful. Even I had deslusions of developing my own before I decided to switch to a slightly smaller genre for my own game project. I think all indie and solo developers at one point have had to come to the realization that its not realistic. Its just too much work.
Bethesda's game engine, Creation Engine, actually helps them in this case, because it is purpose built for this genre. It is significantly easier for them to make another one because they already have most of the systems already in place. Compared to using generalist engines like Unity or Unreal, Creation Engine (I used to know it as NetImmerse) gives a huge leg up on creating that type of game, significantly reducing the time and money investment required.