I actually have a background in behavioral psychology, so what I am saying is based on research and not pulling opinions out of my butt.
Yes, this is exactly how it often works. Another example is, of all things, Hamburger Helper (apologies to our fortunate friends overseas who have no idea what I am talking about). At one time, General Mills believed the way to increase the rate of sales was to offer more and more varieties of HH. The plan backfired. Eventually, they decided to cut back the product line dramatically, after which total sales grew significantly. Apparently, people were confused and turned off by having too many choices. It might seem counterintuitive, but that's how it goes. People might think they want more choices, but their behavior doesn't necessarily confirm that assertion.