He probably means that the centre has shifted more to the right. And/or that there are more single-issue voters, probably due to the revolution in communications, the so-called "wired world."
One democratic alternative to winner-take-all elections with clear losers and winners is consensus-building. Either the Israeli way, with multi-party participation and elaborate coalition-building, or the pow-wow way, which I last saw in action in the student radical movements of the 1960s. The Israeli way seems to leave the vast majority of the citizens at the mercy of their craziest extremes, and the pow-wow way just takes too damn long, and ultimately bogs down - - in the end, nobody's got the patience for it. Sometimes in life, you just gotta make a decision, right, wrong or indeterminate, and then move on to the next problem. The two-party system's probably the only way to go, flaws and all. It's not working now because the Democrats are more afraid of not winning than they are of the system crashing.