I think the long and short of it is that snow tires are a pain in the ass.
Tires are a LOT more expensive today than they were pre 2008- the near-collapse of the auto industry took out a lot of excess production capacity- tire manufacturers closed plants when they couldn't sell tires to go on new cars, and since then, production has not completely kept up with demand- expensive tires. Paying $500+ for an extra set of tires becomes a luxury when people have to squeeze to buy the year round tire- monetary pain in the ass.
It is a pain in the ass to store the tires in the off season.
It is a pain in the ass to haul the tires down to the tire store to have them swapped on, and a pain in the ass to pay somebody to mount them each time.
It is a pain in the ass to invest even more in a set of steelies so you don't have to go to the tire store.
It is a pain in the ass swapping your steelies on with a jack in the driveway- procrastinated so you are doing it while it is snowing on you.
It is a pain in the ass to look at "ugly" steelies all winter so you are tempted to spend even MORE on a better set of rims.
It is a pain in the ass to either stare at your TPMS light all winter OR invest $$$ in a new set of TPMS sensors.
It is a pain in the ass to invest in a new set of TPMS sensors just to have them still be balky and set off the light.
It is a pain in the ass to swap out the snow tires just to have that late storm hammer you 8 days later.
It is a pain in the ass to procrastinate swapping the tires, cooking them on hot summer roads and wearing them out in two seasons.
It is a pain in the ass to invest all of this $$$ in snow tires just to watch it not snow enough to need them during the entire life of the tire.
Contrasted to all of this, one can make a 1-time choice to purchase an AWD vehicle, and equip it with quality all weather tires. That AWD vehicle on all season tires will perform much better at doing things like busting out of an unplowed driveway than a 2WD vehicle with snows.
Case in point after ~2/12 feet of snow. To gauge how much snow is down, note that Subaru has a ski rack on it that is buried so deep it is almost invisible. We wanted to go skiing rather than spend a few hours digging out our driveway, so we did so. The road is about 15 feet higher than our parking area with a fairly steep climb. Both cars (as it happens, we have 2010 and 2005 Subaru Foresters) on all seasons with about half their tread life, had no problems getting out, uphill, through that amount of snow.
In economic terms, snow tires are an inferior good. When presented with other options, even ones that may not perform as well, people chose those options. AWD is much more prevalent than it used to be, and more people are going that route to meet their needs.
This doesn't need to turn into the tired (hah) old discussion about AWD vs. Snows- AWD does not have to perform better than snow tires, it just has to perform well enough where people choose that option because it is ONE HELL OF A LOT MORE CONVENIENT and in most cases will perform well enough to get the driver where they need to go.