I don't view the concept of DQ as a failure. I mean, if it closed within the first year or two, yeah, but to be open nearly two decades, that's success.
Ultimately though, it came down to a lack of support from leadership. Disney leadership has been slacking since the timeframe Disney Quest opened. They treated it just like they have the water parks, as just an extension to the theme parks. Even the theme parks themselves receive less attention than they should get.
Then, video games at home and in (now nearly non-existent) arcades became more advanced. Smart phones happened. So, the world advanced over the two decades while Disney Quest remained stuck in the late 90's, making it less and less impressive to guests. Also, one by one, effects stopped working that made Disney Quest unique, such as the Genie opening sequence.
Really for the lack of investment the place has received since opening, it's impressive people still go into Disney Quest and shows how state of the art it really was when it opened in the late 90's. Think about it, how many 20 year old devices do you actively use around your home? For over 90% of Disney Quest to still be appealing to so many guests after two decades, with nearly no updates or tweaks, it shows how ahead of its time it was in the 90's.
The main reason DQ fell though was because Disney was impatient with Chicago. They plopped their product down in a random location and hoped the brand identity would be enough. Really, they should have worked DQ in first with Disneyland on the west coast and branched it out to other cities very slowly, probably starting with New York. They could have even gone international with Paris and Tokyo if the other owners got on board with the idea. So their strategy was wrong, in terms of where to have DQ (should have started with tourist areas where Disney fans were already going). Once they decided to close Chicago's DQ and stop the others, DQ in Orlando was on borrowed time, despite being popular at the time.
Rather than being a failure, Orlando was proof the concept DQ worked. Had they tried it out in Disneyland and other areas, like I mentioned, it could have been updated and kept its state of the art feel, possibly lasting forever.
So it's sad, but DQ failed because Disney leadership wanted it to after it no longer fit their vision. They didn't see it as a theme park, despite being labeled as one, and because they failed to keep up with it over the years, it looked old and clunky in what is their hip and modern shopping mall. Until they started limiting admission (AP's come to mind) DQ was still drawing a reasonable amount of guests. So, popularity had little to do with it, more so, just the fact it just didn't fit with the "new bold vision" since it was an old, broken, worn, now-labeled arcade.
So much potential here that lost out because of a lack of a leadership with vision.
