First of all, let me just say that this hobby is doing fine.
I'm saying that not just because I'm back to flying with my kids, but based on the increasing year-over-year NAR membership counts, and recent uptick in supplier sales (Estes).
A thread of this flavor comes up for air once every ~6 months, and it always ends with the realization that the hobby is growing, and doing better than it has done in decades.
there always seems to be a Boy scout club or similar at pretty much every launch. Or a TARC team. I've seen a couple families who are also trying it out, whether the dad is trying to get their kids involved, or the kid wants to try it out. I tried to get both of my boys interested by taking them to launches and helping them build their own. But, they just weren't that interested. Video games were more fun to them. Yes, we had fun at the launches, they liked going for the day, but nothing beyond that.
So that's one of the challenges, how can you get a young person to focus that much time and attention to something where the reward takes much longer to achieve?
Exactly the same way as you focus their attention on all other beneficial but challenging tasks - with parental guidance, participation, and incentives.
Getting your (and my) kids to participate in rocketry is no different than getting them to do homework, clean-up their room, do other household chores, or participate in other after-school activities.
Sooner or later, kids figure out that all of these activities take more effort and are less fun than playing video games and eating cookies all day.
That's were parents come in and course correct. Course correction methods and approaches change with age, but if the parent is not paying attention, not caring, or not seeing the benefit of investing time into their kids, then kids will fall back on video game and cookies. Every time.
If you haven't met them yet, brace yourself of 50+% of your peers with disinterested and overweight offsprings, who blame it all on schools and video games....
Another is ease of launching. When I was 12, I could buy all my rockets, motors and such on my own. Build them, then go to Hart park in Orange and launch them. Didn't need permission or my parents to be present. Those days are long gone. I remember taking my youngest boy and a couple of his friends to the local elementary school and launching. But my head was on a swivel because I didn't want "to get caught" I kept everything low. We had a great time, but I took a chance, and they never mentioned it again.(meaning they didn't show any further interest beyond that day) The only real, legal option here is at a sanctioned club launch
That's not universally the case, even in the over-regulated NorthEast.
You can launch rockets at local parks and school baseball/soccer fields, all day long. Just ask.
I had called our town's police department with that question a few years back, and got a "why are you even asking, go for it, just keep it safe" response.
On the other hand, you seam to be posting from Cali, where all things get weird, and fast ;-)
A third reason is cost. Let's be honest, you give a kid $20 bucks what do they want to spend it on? A pack of motors? Doubt it. It is an unfortunate circumstance in todays economy. [...] But the fact is, we live in world that demands instant gratification, and this hobby is the complete opposite of that. And that may be the biggest challenge it faces.
Cost is always a consideration in all hobbies.
For me, rocketry is BY FAR the cheapest hobby and after-school activity that my kids and myself indulge ourselves.
As usual, it may, or may not be a priority at any given point in one's life, and for a given level of disposable income. Rocketry is certainly not free. But nor are any of the other fun activities and past-times!