isn't it primarily S's fault if they can only muster 29% of the vote while being the serious party that has governed Sweden for forty years ? Isn't it their job to convince voters that they are the credible alternative, and not FI or any other option ?
Yes, and yes.
If there is a problem, it is the arbitrary percentage threshold, not the existence of parties or people who support parties below that threshold.
Even if politics were just about policy, look across the North Sea to the UK. UKIP gets issues on the agenda that other parties would prefer to ignore, even though UKIP will win very few, if any, Westminster seats.