The other thing about porn game not being popular is certainly the lack of big teams.
Most of the games are held by little teams or solo devs. And AAA-quality can't be reached with such a reduced effective unless someone very motivated works on it for decades... and they will obviously not waste time by studying fully the market like mainstream companies do such like probing the players to get the best balance between story-telling, gameplay-value and sex.
So, even if a game maker put all their energy and passion into a porn game, there are obviously some flaws, some aspect which are less polished (graphics, story-telling, gameplay, etc.) The games which are favorited are for the most games which manage to have balance in these : simple gameplay not too hard to handle, good plot to get somekind of immersion and sex scenes present enough to have our dose of dopamine time to time.
About the argument "there are alternative to porn game" : imo, it's not entirely wrong, but also not entirely true as we could say the same about any genre. It's more about the means such like communication.
It's easier to promote a "classic average rogue-like" than a "run or rape". Just because saying it out loud could lead to censorship if reported, especially if the game contains hardcore elements. Sure, you'll have nice person who will search for your content and support you gladly (and we'll never stop to thank them) but I think I'm not wrong to say they are a minority among the gamers.
Thus, all these things combined (so small teams, lack of real market data, reduced communication, etc.) are certainly a good reason the porn game industry is stucked as a niche.
Imo, it's absurd and I completely agree, there's a paradox "Gore and torture is ok, but two people having a fuck, even consensualy, is a no"... To me, this part of the industry deserves as much attention as the rest.
That's the reason I think the best thing to do is to keep being a strong community so porn devs and porn players could help each other to make better games, spread the word and potentially get rid of the censorship in long term.