It's like any other product that gets developed really.
It's expensive, rubbish and unreliable. Some people want it because they need it, some want to be early adopters, some want it because they really want the features
>insert development period - days/weeks/years/decades
It's cheap, good and reliable (more likely 1 or 2 of those 3) It becomes the norm, and it's predecessor fades away.
Automatic gearboxes have been through this development period and are now no longer at a stage where they are considered a risk or compromise by the average consumer, ergo they begin to become the norm instead of manual gearboxes.
The cycle just takes longer with cars than it does with most other tech.
When did you last seek out a new TV with a SCART socket?
Do you scour the classifieds desperate for tools that take NiCAD batteries?
When did you last look for a motherboard that takes SDRAM?
How are cassette sales doing these days?
I'm not an automatic defender by the way, far from it - but you can see why manual gearboxes are in decline.