Isn't the basic question how the Hi-end defines itself, at least with respect to how wide a band of interest they can shoot for? There seems to be a pretty constant pressure from "the high-end" to define big chunks of stuff out of the picture - popular music, CDs, digital in general, interest in HT - all these things are kept at a distance, at least from high-end and/or audiophiles in the strictest sense which, by definition then, precludes the possibility that there will be a wide band interest.
The supply and demand question regarding A/V gear innovation is probably answered by "both" - people want it because it was created and marketed very effectively. But even here, the audio high-end goes to great lengths to distance themselves from this development. Why is the pursuit of movie replay at a high level of excellence any less worthwhile than the same pursuit of music replay? Sure, there's lots of garbage movies made every year, just like there's lots of garbage music made every year. But good and great movies (of which there are many) are greatly enhanced by playback on a good system, and the better the system, the better the experience, to the point that you can definitely create a better experience at home than you can get at all but the most modern cinemas. Certainly, what you can get for HT has advanced several magnitudes more in the past 15 years than home audio in the same time frame.
If what we mean when we wonder why more people don't love audio is why aren't more people spending money on dedicated equipment for audio reproduction and dedicated listening, I think we're limiting the question the same way the high-end limits how wide its own reach is.