You guys kind of underestimate the effort and resources necessary to make a decent VN. Art is really expensive, and voice acting even more expensive if it's meant to not sound like shit. VNs are a really good, cheap tool for people that want to create basic interactive stories for fun or are artists and want to apply their own skills in such a way... But when we get to levels of quality that could be attractive to a mainstream audience the difference between VNs and simple 3D game or other types of 2D games isn't that massive. And I'm not sure I have to remind anyone how huge 2D/retro gaming is right now, so we shouldn't really have to use AAA games as the point of reference...
Anyway, I think most arguments people already listed are valid (massive amounts on text in aggressively pushed "kamige", questionable porn, anime aesthetic)... But an important point people forget about is how many, often high-quality VNs don't have mainstream appeal because they defy expectation/do not provide the kind of interactivity Western audience wants. Every time I see Steam users complaining about a VN they played not being a game or having too few choices, it reminds my how either bizarre or dull the idea of interactive literature is for an average gamer... And at the same time, people who are not into games in the first place have few incentives to get into this particular niche of otaku media. And the way the industry handle stuff hardly helps. One genuine perk of VNs over other otaku media is conclusive romance, but for example, we in the West never get the anime tie-in titles that let you pursue a non-canon romance from popular shows. We never see VNs coming to the West with a proper marketing budget either. The result is that you have things like Steins;Gate and Clannad, with legendary-status anime adaptations, being the only VNs with proper reach, alongside gameplay-heavy adventure games such as Danganronpa or Ace Attorney and occasional lowest-common-denominator moe crap like Nekopara...
I don't know if I'm right about it, but the longer I look at it, the more botched the whole "bringing VNs into the Western market" feels. Mostly because it relies on the existing fan community nearly in 100% and its ideas of outreach stopped at MoeNovel's delusions of 12-years-old French girls playing Pulltop's waifu games. Either VNs truly have no appeal in the West outside of porn and the small crowd of people looking for romantic stories, or they are selected and marketed in an atrocious way. I would hope it's at least partially the latter, because that still can be remedied to some extent... Like not letting this category on VNDB to forever stay massively neglected.