Some good points above. The key change (IMO) is that portable music is so simple and has become pretty decent in recent years. Most people already have a multi-functional device in their hands (replaces laptop, camera, audio and video player and so much more) so just adding decent headphones makes possible perhaps 75% of the "hi-fi dream" from a sound quality, at a fraction of the cost.
This sunk home for me recently - I spent approx £600 on an entry-level A&K SR25 audio player and HiFiMan Edition XS 'phones - amazing value for money compared to what I have in my old-man's hifi system, plus I can listen in any room (or if so inclined on-the-move too).
And we have to recognise that hi-fi is not just about the music, there is also an element of ownership / materiality / collecting / twiddling that satisfies our OCD tendencies**. Perhaps now we have shifted the focus of this to today's mobile tech?
On the small / cottage industry aspect, manufacturers have got us by our short and curlies with the newer tech. I cannot imagine holding on to a smartphone for over 20 years, yet some of my hifi has been in my ownership for this sort of timeframe. And their target is most of the world's population - some 7bn people - not the few tens or hundreds of thousands that manufacturers of old might aspire to.
** I don't mean to insult anyone here, I know from my personal experience the for those "into hi-fi" the enjoyment of the music is not the only motivation. And different people sit in different places on this scale - enjoying music / collecting equipment / CD / LP / cassettes / cables...