Over diversification is dangerous too. Jack of all apps, master of none? I like the idea, but the problem with this product space search is that is dead slow. You might want to search like this for a bit and see what takes off, then put more energy into the ones that are doing well.
You are right about the dangers of diversification. You would have to prune down projects as you go or else risk not doing anything well.
However, if the projects are designed to be all up front effort and no ongoing time costs, you can just leave them to languish. I have had things take off in a minor way, long after abandoning them.
