The onboard sound chips became good enough, and for those for whom they weren't good enough the noise reduction bonus of an external DAC was worth it anyway. Computers are generally bad for analog signals within a few inches of the case.
I think another factor is MP3 players and phone audio; people stopped using their computer as the (interface to) media source when other things took that function over for them.
There was a point of "good enough" and then not long after that (2005ish?) essentially all motherboards started including onboard audio. I would imagine the market for separate audio cards shrunk below sustainable at that point. Most everything else in the case (GPUs, RAM) are headed there too, it's just a matter of incremental development on the existing trajectory.
I think another factor is MP3 players and phone audio; people stopped using their computer as the (interface to) media source when other things took that function over for them.