In my opinion reality and changes in real railroading have had an enormous impact on train modeling.
The appeal to kids being lessened is understandable and that of the older crowd is as well. My back is bothering me hence this comment is being written in the wee hours to distract from the aches..none the less...
I think the answer is twofold. Ask yourself how many consists sold to kids are powered by modern diesels and yet carry long ago discarded equipment like forty foot slogan boxcars, short tankers,old heavyweights, obsolete streamliners and early even cabooses instead of end of end of train devices? Why is the transition period between steam and diesel power the predominate era modeled? Why are long ago discarded road names dominating the market? The simple answer is what existed back in the day was more variety. How many folks rode trains back in the day compared to now? How many everyday folks were employed by the roads, as hostlers, firemen, station agents, passenger conductors, Pullman porters,crossing guards, freight handlers etc, etc. A comparatively enormous percentage were involved or interacted one way or another with railroads. Do consists and equipment match what is used now thats marketed to kids? How many kids have seen a living steam locomotive, a PA, a Shark, or an F unit, etc? How many regional or Class One’s once existed with a local and distinct flavor like the Monon, the Lackawanna, the Rocket Island and their Rockets? What do we have here in the U.S now? Three maybe four roads if you include KCS? The consists are as monolithic as to type. All of the above explains to me the disparity in the demographics of involvement in the hobby. Lets face it we are in love with what are to kids today essentially non existent antiques confined to museums. This also explains the growing steam excursion or tourist operations as seeing something rare ..very different from today's experience, hence their popularity.
Philip Hastings said that with the passing of the steam era, train watching comparatively became the equivalent of watching a conveyor belt. Ours run in circles.
I wouldn't go so far but close.
The cure for the demographic shrinkage?
Stop making adult toys for kids.Kids do not need electronics to have play value at an age where they get hooked. By the time they are teenagers and do get into electronics guess what? They want a I phone, a laptop, etc..model trains with push buttons that go around in a circle? Give me a break. How many of us ditched trains at puberty? 99%.
The secondary causes are the lack of no frills very basic, cheaply made simple to use, conventional run basic sets using equipment actually seen by kids ..We need more Amtrak sets, more basic non complicated accessories with play value, not blinking billboards..we need play figures...trucks and forklifts, even small plastic basic container ships with loads .Take a page from the hugely successful Marx playsets. Why do we think LEGO is so popular? we need more investment in media advertising using these advantages. Isnt that what the owners of these companies did that kept them gong for decades? I love the hobby but daydreaming or the current status wont save it.It will continue to shrink unless manufacturers wake up and smell the coffee burning.They are about as insular as a hobby gets. I give ( is anyone) Lionel a lot of credit but what are they thinking? North of the Mason-Dixon line or West of the Mississippi NASCAR interest is about as popular as horse sulky racing. Wheres the play value in a Sponge Bob Boxcar? Frankly I think the market for grade school kids is horribly mismanaged, even incompetent. Want to change the demographics? It doesnt happen with aging boomers.