Imho, I think it's a bit disheartening for a person (s) to go through all the effort of a photostory, and have it receive luke-warm attention. It seems like those who appreciate the work most are those who've attempted it.
With all the attention showered on basic figures that have had the weapon changed out or a groundbreaking ballcap switchout, while scratchbuilt items and many vehicle modifications/builds often garner faccacta in comparison, I'm sure alot of people don't find it worth the effort anymore to undertake something that can be as daunting as a photoproduction. Figures can be bashed and tagged with the "I do this for me" line...photostories are done precisely for an audience. When the audience reaction is mediocre, the future of such efforts by that individual(s) is in question.
It's likely that those who focus on the figure buy-and-redress aspect simply have no frame of reference for the difficulties and/or hurdles faced in the other facets of the hobby that they don't seem to appreciate the results as much. It's only someone who has played baseball that can appreciate the homerun. Just trying to construct a building facade to photograph a fig in front of, rather than a computer monitor or kitchen counter, would impress upon many a basic understanding of even the construction aspect of a big production.
I have a couple photostories in the works. As soon as all other commitments are taken care of, I will begin on them. They aren't popular eras or genres, but I stopped trying to please everybody long ago and just do the eras and shoots that I like while ignoring the "you should do thises..." from those who don't ever do a damned thing. If just one person gets a kick out of it, I'm happy.
Far as I'm concerned, the photostory isn't dead.