I'm not quite sure how you turned this into another thread about the evils of the term "self-defense".The point I was trying to make is that training competitors is going to naturally drive the training to that activity. So, the goal is to train people to excel in the sport, and for the most part, people understand that. No one likes to see kids (or anyone) get hurt through negligence, but kids play football, basketball, soccer, and all kinds of other sports that are really quite dangerous. And they mostly do so safely, and schools and school districts in the USA manage to offer these sports with minimal legal risk to the school district. Martial arts schools like MMA schools, boxing clubs, BJJ clubs, etc are pretty much in the same boat. So, outside of obvious negligence, people know what they're getting into.
I think schools that don't have a natural and obvious goal for the training are very susceptible to watering down the training. Because, if they're not training competitors, what are they training? If you look a some of the "self defense" techniques, I would say the claim is that they're training killers. Something like, "We don't train you for sport. We train you to defend yourself from really dangerous people, and our techniques are deadly."
The end result is a situation where marketing creates the problem. Schools that are catering to the timid customer who doesn't want a lot of contact are creating for themselves a real dilemma. Simply put, when you actively market to people who don't want contact (or pain or sweat or any difficulty at all, really), should you be surprised when they get upset if they get hurt? In those cases, given the marketing, I don't blame them at all. Like the person who gets upset when they're told that their crystals will align their chakras... they paid good money for that, and I don't blame them for being upset when it doesn't work.
To be clear, this is beside the point that a lot of timid folks do really, really well in competitive sports. Overcoming the negative marketing from the killer (but easy and comfortable to learn) arts is a real issue, but that's a different thread.
And also, I think this is a closely associated issue to McDojo, but not exactly the same. I generally think of McDojos as subscribing to certain business practices. But that said, this is all a part of the issue. Watering down the art, overpromising and underdelivering, and the other things we're talking about are a part of what a McDojo commonly does to woo customers through the door.
I agree that folks have a better picture in most cases of what they're getting into when there's style-specific competition, assuming that competition is the high end of the risk. That may not be the case, for instance, in some TKD schools. There may be some that compete in the fairly light-looking contact you see in the Olympics, but also train with something closer to full-contact sparring within the school.
I would also guess the problem exists for less-known styles, if someone joins not knowing what the competition is like, so they don't have that as a guide to what they should expect.