I was thinking that visual novels only have a niche simply because its impression is that of a 'porn game' or something where you 'go and get girls'. That's basically the responses I got when I asked people from my soon-to-be college if they played visual novels. It's kind of sad, but it's true lol. I don't think the whole scene should be determined by those words alone though. Not all of them are like that.
Anyhow, like you've said, I'm sure that the decrease in the reading frequency of people can contribute to the overall success of the industry. But, like some of them have said, it's the percentage of readers when compared to the population of the world that's decreasing, not the number. You'll think that the number should be increasing as the population grows, but y'know. It's hard to stay focused on reading only, given that the world has sprung forth a lot of entertainment mediums besides that of books, which were the dominant medium back in the days. It goes to show that as time passes, habits do change. Though I do hope it doesn't change continually that way. Reading is still an important part of life. That's what I believe.
I don't get why people don't like visual novels though. You basically read, get entertained, and get porn at the same time!