TBH I don't think the problem is just with young people. My own situation is a good example. I'm 41, not young (but not old either

), but my interest in 'serious' Hifi has all but disappeared. About 5-6 years ago I had a system that was worth getting on for €5K and hifi was a hobby that consumed a lot of my time and a lot of my money, hey, I even started this forum!
However, for a number of reasons, I started to get very disillusioned with hifi and everything that goes with it. It started with the realization that the hifi cable industry is little more than a scam but I gradually realised that there really is very little audible difference between amplifiers and CD players, regardless of whether they cost €200 or €20,000. It's my view (and my experience) that the differences between loudspeakers, rooms and even listening positions totally overwhelm any other slight differences that might exist in the rest of the chain to the point of making them insignificant.
When I walk past hifi shops these days and see the four figure price tags on the equipment in the window I can't help but have a little chuckle at the 'mugs' who buy that kind of gear, remembering that I was once one of them. The hifi industry has a lot in common with the expensive watch industry, but at least the people who buy a €5,000 watch know that it doesn't tell the time any better than a €90 Swatch. They buy it for the looks or as a status symbol and at least everyone can see it when they wear it. Unfortunately most people who buy hifi systems costing thousands do so in the real (but misguided) belief that they are getting their money's worth in improved sound quality. You only need to look at the (often much lower) cost of professional studio gear to realise that it's all just a con. Hifi must be one of the only industries in the world where professional kit costs a fraction of what a lot of 'amateur' kit costs.
Apart from the many good reasons already mentioned in this thread, I think that 'young people' can see through the con that is the general hifi industry, and are just not buying it. Even most 'middle aged' people these days have an all-in-one DVD/CD/MP3 system which will give them excellent sound quality, for the very rare occasions when they have the time to sit down and just listen to music, where that quality makes a difference.
I myself have a
Harman Kardon HS200 2.1 DVD/CD/MP3 all in one system, which I've had for nearly 4 years and I can tell you it sounds stunning. I know many people will be sceptical or think that perhaps my problem is that I became deaf, but I can promise you, if I put you blindfold in front of this system you'd think you were listening to an expensive 'proper' hifi setup.
My main listening these days is on my iPhone at work with some Sony MDR-EX70 buds (excellent) and at home the HS200 takes digital input from my iMac/iTunes via an Apple TV box. Occasionally I'll actually put on a real physical CD

. I still enjoy music just as much as ever, actually probably even more so. It's just so liberating not to have to be thinking about the kit.
As to where the hifi industry needs to go I tend to agre with Labarum's posts about active speakers for the home.
Michael.
PS: Hello again to those who remember me :MILD: