The Vita's lack of success is the result of a few major factors happening at the same time:
1. The rise of mobile. Nobody can deny that handheld gaming has experienced a shift in the last 4-5 years. And this shift works against traditional handhelds like gameboys, DS's, PSPs, and Vitas. Dedicated handheld gaming systems can't compete in the casual space anymore. Phones and tablets offer free, fremium, and cheap solutions for that audience. So dedicated handhelds need to be able to cater to the more "hardcore" gamer.
2. And that's where Sony dropped the ball. At the beginning, yeah, it looked like we'd get some great PS2.5 type experiences. But that ended pretty quickly when Sony decreased support. And what little third party support also dwindled. Over time, the system slowly devolved into cross-play titles, ports, and smaller indie type games. Which is fine. But the list of exclusive games on the PS Vita is a relatively small one (with the bigger budget games making a tiny portion of that). And a good chunk of those are Japan-only.
3. Nintendo dominance.
I absolutely love my Vita. I got it at launch and I definitely don't regret it. But other than the 3-4 exclusives I have for it, it's mainly used as a remote play, PSX, PSP, cross-play, and indie game machine. Which is a far cry from the expectations the system had before launch.
