I remember going to an O Scale (not 3 Rail) show with my mom and dad, probably in the 1980s, and they were whispering to each other, "Look how old everybody is... This ain't gonna last 5 years...."
Here we are nearly 40 years later. And still, everyone at the O Scale shows is really old. But I think 3 things are happening to continue supporting this hobby as long as our economy supports it:
1. People are living longer.
2. Younger customers, while not as many as before, are coming up in the ranks from HO, as they always have.
3. Technology is improving making it easier to produce model of greater quality and less quantity, albeit more expensive.
I told my boys the same thing my Dad told me. Go out and make your mark in your own career before you can consider to work at the business. I don't see great growth potential with our market as it is. So I don't want them focusing on working in this industry.
It was different for me in 1997. I had been working in Aerospace and startups for 15 years and wanted to run my own business. Dad had already broken into the 3 Rail market which at the time was on fire. We would announce a project and 500 orders would come flying in. You couldn't make the models fast enough. Everyone (Importers) was doing well. But that was the peak, year 2000. Dad needed help overseas supervising the construction and engineering. He had been going over there on his own since 1974 and he had some health issues. So it was a good timing and a good fit. We grew Sunset Models in that market and things were fine for many years, and still are.
Today, market growth is difficult, and there may be a point when the market doesn't match the cost of production and then the business stops. But until then I will keep plugging away at it. One think I learned about business is that the only constant in business is change. Keep moving with the change and you can keep going. Get rigid in your beliefs and your place in the market and you will find yourself out.
We went into the European market years ago. We saw what was possible and did it. Then we got out. We have been in N, HO, HOn3, S, G and of course O Scale. There are a lot of companies out there supplying these markets. One trend I see are factories selling direct into their markets. Bachmann is owned by Kadarr in China. They also bought the Williams label. It's more efficient that way and that's probably how the bigger companies will survive going forward, factory direct.
As for Sunset Models / 3rd Rail and GGD, we are a boutique model producer / importer, and we can expand and contract with this market or that. It can be in a warehouse with employees or at home with just me and my wife. That's how my Dad ran the business for the first 5 years.
As long as we are having fun, we will keep producing models for interested customers. For me, my hobby is running this business. Can't ask for a better job.
Because of Dad's history with Heart Disease, I got scanned and checked recently. The Cardio said I would live to 105. I said, that's too long. 90s enough. So I got 36 years of model making to go...
) as $10.23 today.
...all over again! ( I remember with the 99.9% mental clarity of an old septuagenarian phart that the box, wrapped in white paper with a red ribbon bow was, indeed, marked to me, "from Santa".)
. I'm 20-25 years older, and my phone is used in very similar ways to those you describe. I also like toy trains. 
