They do realize they have competition. Sadly they think it all comes from various divisions within Canon only!
Look at how many little basics they crippled out of the 5D3. So instead of it continuing the revolution, getting mad praise, flying off the shelves like crazy to film people, and cementing themselves as the leaders in the market and making themselves hard to over thrown, they play stupid little games with internal market segmentation plus get greedy. What a waste.
The 5D3 upgrades on the stills side were huge. Canon didn't know the 5DII was going to be as successful in the film world as it was, and now it seems like they just trying to keep the two separate. Even the 5DII shot great video (at the time) in a lot of ways it just wasn't ideal for video at all. So why add killer video features to the 5DIII, a camera that was intended for stills? There is a huge segment of users that don't use the video features at all, so why make them pay for it?
They realized how much demand there was for a large-sensor video camera and acted accordingly. It makes a lot more sense for them to make a camera that addresses the video users needs (C100) and another for still users (5D3) instead of making one half-assed, dual-purpose camera. They would have had to make a lot of compromises with the 5D3 to make both segments happy, so instead of making them share one camera they gave them each their own.
How much money would adding zebras and some focusing aids during shooting and a crop mode cost? I'd bet any extra cost for a bit better codec would be made up better sales.
And if they didn't care about 5D3 video then why 22MP?
And the video feature on DSLRs actually is pretty popular.