I don't agree with this at all. You also made many assumptions in your previous post as well, which I really didn't agree with. First of all I don't think you are using the word "gameplay" correctly. I assume by lack of gameplay you really mean the simplicity of the basic concept, shoot and dodge.To my knowledge, the shmup genre is mostly filled with games that are frentic and fast paced, but with a high difficulty level, with the main objective being to have the highest score possible. So it is more or less (and don't be offended when I say this) casual gameplay with hardcore difficulty levels. So the reason that shmups are such a niche genre is because that most casual players, although they may like the gameplay side, are put off the steep difficulty level, whereas many hardcore gamers like the challenge aspect, but are put off by the lack of gameplay. This means that shmup communily isn't big enough to support a market for this genre, and that is why I believe there hasn't been a market for this genre outside Japan to this day. That is why I believe shmups are such a niche genre.
Well, in that case, how do you explain the abundance of mainstream games out there (not all of them though) that are ridiculously simplistic in their basic concept and yet successful. For one, you could take the example of guitar hero or other traditional music games. Then alot of single player mainstream games (apart from few exceptions) have not much meat to the actual game playing anyway. And yes, I have played my fair share of current gen and last gen games.
I don't believe there is one reason for the lack of popularity of genre, but quite a few of them that contribute incrementally. I want to list few basic reasons that come to my mind immediately.
1- Out of fashion in terms of aesthetics. The current trend seems to be the obsession with either realistic games or games that can be termed as artful. This is why a lot of western arena games are abstract compared to japanese games, which have a more concrete setting.
2- Perceived lack of value. I am not gonna go into whether I agree with this personally or not, but this is a very important reason without any doubt. Most players and reviewers would consider making you play the same levels again as an artificial way of increasing length.
Since most of the devs. making these games are already very small in size, they cannot afford to make a long game anyway, so possibly, this is a vicious circle. Why would someone spend so much money on making a long game with big budget, just to witness less than mediocre sales. The arcade model of 30 minutes game works better for small developers.
3- The general ignorance of reviewers and the players, and hence the overall ignorance in the mainstream. This is because to an extent reviewers do shape up the tastes of the players. You only need to read a some of the common complaints in the reviews. This ignorance goes well beyond just the lack of value complaint.
4- General lack of will of mainstream players to dedicate themselves to competition is not the only reason. If that was the only reason, then why do you see games that are not really that prominent in mainstream radar, but still have very high amount of players. More importantly, how they are received in mainstream does not matter that much.
The fact is that there is a lot of competition, but mainly directed towards the multiplayer side of things. A single player game in this day and age cannot succeed just on the basis of good game play. It also has to offer graphics, content, story and pop culture appeal for the mainstream.
So, in short, I think that games with mixed arcade and console sensibilities (bayonetta, S&P2 etc.) are the only way to make these games more mainstream, while still preserving the game playing elements that appeal to the core fans.
And there are some problems of stagnation with the genre in my opinion, regardless of how much hardcore fans deny this. Part of this is exactly because the genre is niche and hence the developers have small budgets. Consequently they have not that much room for creative maneuver. No doubt there have been lot of well crafted games of the past already out there. However, personally few things that bother me are:
1- The over abundance of danmaku games in the recent past.
2- Lack of emphasis on shooting/weapon usage in general, and more particularly in cave games. I am not talking about enemy placement and stage design, but strategic weapon usage. Think games like Gradius V, Under Defeat, Mars Matrix, Strikers Plus etc.
3- Lack of experiments in multiplayer department.