No its not killing the game. I don't want to pay to stand around for 3 hours hoping to get claim on some 24 hour spawn. Or sit there at a camp for 3 days to get a 72hour to 1 week spawn nm like in FFXI.

Instances is how the mmo genre evolved and it works well because you can play the game fight the bosses when you want without having to compete against a whole server of people for 1 monster spawn.