I feel like one of the largest things about tentacle hentai is that it speaks to some very specific niches. It was already so extreme that it would tend to also include stomach inflation, pregnancy (of a sort), massive loads, rape, etc... all without the need for a male to be onscreen.
At it's height, probably around the early 2000's, there also wasn't really other places to go for these fetishes. It was kind of go hard or go home... if that adage fits.
Over time though with more and more people getting into porn and the advancement of tools that allow people to make porn, those other fetishes got their own niches. If you want to see a pregnant chick... there are places you can go for that now. All the people who were reading tentacle hentai for that now go somewhere else.
While a lot more people indulge, per person porn consumption hasn't gone up significantly, it's just become a lot more focused. People tend not to rise the quality desired bar when presented with more options so much as they narrow their focus on concepts that they enjoy. Twenty years ago you made do with what you could, these days you brows throw a list of 20,000 games with 7 tag filters on and scoot past fantastically made and beautiful games so you can play something that fits your taste. And no shade on those fantastically made games, they get their fair share of players, but those players are looking for that game.
That kind of leaves tentacle hentai in the spot where now the only people interested are the ones there specifically for the tentacles. And there are definitely fans for that, but it's buried in a pile with other very specific fetishes.