My two cents worth:
I'm not entirely sure that anything "killed" prog. I could make the argument that music goes through "periods," and that no period lasts forever. Nothing "killed" doo-wop or Motown or rock'n'roll, etc. (Just as be-bop didn't "kill" swing, which didn't "kill" dixieland, etc.) Part of it is (as Ulf notes) that culture - tastes, styles, etc. - changes. There is nothing necessarily "nefarious" about this.
However, there certainly were a number of factors that had an effect on the prominence of prog. The break-ups (or major personnel changes) of the seminal bands was one, though I'm not sure to what degree. I think the far more major change - which affected not only prog, but almost everything else - was the conglomeration of the music industry.
In the 1960s, when rock was young, promoters and producers were supporting anything and everything in "rock," since no one knew exactly what would "stick" when thrown against the wall. So they threw everyting at it. Eventually (i.e., by the late 60s), the industry - vis-a-vis rock - settled into a handful of genres, including "black" music (Motown, Stevie Wonder, etc.), "heavy metal" (Cream, Zep, Sabbath, etc.), "folk-rock" or "songwriter-rock" (Bob Dylan, Joni Mitchell, Cat Stevens,etc.), "prog-rock" (Crimson, Floyd, Yes, Genesis, Tull, etc.), and "mainstream rock" (most everything else). There were others, but these seemed to be the main five.
Back then, because it was all still "new," artists were "nurtured," and given the time to "progress." Often, an artist wouldn't really "hit" until a third, fourth or even fifth album. For example, Genesis didn't hit until Foxtrot, their third album. Same with Yes (third album). And Floyd didn't really "hit" until Dark Side - their sixth album.
As these various artists started bringing in serious money (through both albums and tours), record companies started to get greedy, and see dollar signs instead of artists - and they no longer wanted to wait for their money; i.e., they no longer saw the benefit in "nurturing" artists through careers (which almost always fell off earnings-wise), when they could obtain major short-term capital via a major debut album. By the late 70s/early 80s (if not earlier), record labels were looking for the "fast buck": if an artist couldn't "produce" by their second album, they were often dropped.
In addition, as a result of the kind of money that some artists were generating for their labels, record companies started to view each other as serious competitors. So a wave of agglomeration started. Consider that even when I sent out my first demo in 1983 (pretty late in the game), there were 30 major labels. By 1995, there were only eight. By 2000, there were only five. And if the proposed merger occurs, there will only be four. And, of course, by now all those companies are no longer run by people with "ears," but by "bean counters," for whom the bottom line is not "creativity," but earnings.
Ultimately, the industry limited choice by focusing on short-term capital. What is ironic about this is that it actually eventually hurt the industry. This is because it is not short-term capital that keeps the industry afloat - even with debut albums that sell 13 million copies. Rather, the industry survives on the artists who had long-term careers - what are referred to as "deep catalogue artists." (These are the artists whose albums almost never go on sale: Floyd, the Stones, Bowie, Zep, etc. The reason is that the industry knows that people will always buy those albums. There is no coincidence that Floyd's Dark Side spent 20 years on the Billboard Top 200.)
This was proven the hard way in 1982. That year, the music industry was expected to post its first major loss in over 15 years - of over $500 million (which was alot back then). Yet three albums released later that year actually brought the industry out of the red and into the black. If memory serves, two of them were Michael Jackson's "Thriller" and Springsteen's "Born in the U.S.A." I forget the third (it might have been Bowie's "Let's Dance"), but all three were by "deep catalogue artists."
As we all know, these days music is mass-produced and mass-marketed to the lowest common denominator. If they can't pigeon-hole you and sell you as "the next" whoever, there is little chance you will ever get a contract.
Such are the vagaries of the music industry - which I believe was the largest factor in the "death" (or at least sidelining) of so much great music.
Peace.