Are you being serious? Firstly, they both have combat, and secondly, Tetris, Mario Kart, Guitar Hero and The Sims are considered niche now?

Actually it peaked at Silent Hill 2, sales went downhill slowly after then. Then after 4 (The Room) they rapidly descended in both sales and quality after a change in developer. I see the franchise (and survival horror in general) now as more unfulfilled potential than niche.

SH1 sold slightly more, unless you're combining SKUs. 

I'd also argue that outside RE and the first two SH, survival horror has never really not been a niche genre.  It hit it big on PS1 with both, RE continued a little longer on DC/PS2/GC before switching to full on action, but nothing else in the genre ever really sold that impressively (ALITD, Eternal Darkness, Deep Fear, Siren, Fatal Frame, Carrier, Haunting Ground, Clock Tower, Dead Space, etc, etc).

Mario Kart has weapons, but no combat? Unlikely. Tetris also has a VS mode. But the question you need to ask yourself is which of those games have an identifiable "enemy?" Anytime there is one, there is a way to beat them. VS mode in Guitar Hero, and Tetris. Every form of Mario Kart has ways to beat the opponents down. Sims I know nothing about, but so far as I know there is nothing that could harm you beyond possible poor decision making on the part of the player.

Silent Hill does have enemies, and you don't fight them. You run. There is no combat. Allow me to quote wikipedia for a moment "Combat has been removed from the game with emphasis placed instead on evading encounters with monsters entirely." You can check any number of reviews if you like. Please go and read up on the game before you try to make any statements about it. It is entirely impossible to have an intelligent discussion if one side is unfamiliar with the very basics of the topic.

Firstly, I honestly wasn't sure if you were being sarcastic. The last Silent Hill game I played had combat, although that was a little while ago admitedly. When did they decide to completely remove combat? The franchise itself, has had combat though.

I also find your definition of "combat" to be a bit shaky. I don't see VS mode as being combat, but having someone else as your challenge. The Sims has no combat whatsoever (actually why I found it completely boring). You could say the same for a lot of god games, or a game like Wii Play (or a lot of the Wii games) or the majority of adventure games. I admit, Mario Kart was a bit of a silly choice, but what about Gran Turismo, or Race Driver GRID, or any Rally/racing game.

Silent Hill: Shattered Memories is, to the best of my knowledge, the first Silent Hill game to remove any form of combat. Series change often, so it is a good idea to read up on the game in question before making claims about it.

Combat is, admittedly, a poor choice of wording. I should say they have an enemy, and you can beat them. This applies only to games where there is an identifiable enemy. In Silent Hill you simply investigate, and solve puzzles. This has never been a popular game type. There are a great number of adventure games that fall into this category. There is almost none that have lit up the sales chart. Fewer still that come from a series whose fanbase would expect to have combat.

^^ In Fairness, point and click adventures have been quite popular before, this just is more of a realtime version of one, but a damn good one!

I would agree with this. However, point and click are very much a niche market in the present day. Unless they were expecting this game to revive the game play style there is little that would justify the game being seen as anything but niche.

As Raze said point and click adventures were popular before as were god games. They've fallen in terms of popularity recently but are seeing a small resurgence on Wii and PC. I doubt they'll ever attain the status they had before with games like Monkey Island and Grim Fandango. I also think some games that may feature combat are actually popular in spite of the combat/enemy, but are popular because of the puzzle and adventuring aspects. The games that come to mind are Tomb Raider, Prince of Persia and Zelda. They may have some combat, but that's not what people enjoy about the games. In the case of Tomb Raider I would argue they could do away with the combat completely as it's one of the worst aspects of the game.

And as I said, past popularity means only so much. The game wasn't released back then, but released now. There is a second coming of them. but none of lit up the sales charts. They perform well enough to keep going. Silent Hill is little different in that regard.