I remember Kamiya saying in an interview that Bayonetta was concepted in a way which he remembers from Arcade heydays: You play it, but you then see someone else pulling off crazy combos without getting hit or creative combinations to beat a time. And then you want to get as good and continue to play it.
This is why fans love the genre:
There's always room for personal player improvement, you can play the best games in the genre almost infinitely. Style and 'story' only hook you in, but really 'playing' it after understanding the mechanics, unlocking more skills to really experiment and the like, that mostly happens on 2nd and 3rd and further replays of the game.
The first time with a Bayonetta or a Ninja Gaiden is a humble experience, you will die, you will fail, you will begin to grasp the basics. If you so choose to continue the game for subsequent playthroughs, you're in for a treat when the gameplay truly unfolds.
Unfortunately, that beloved aspect of the genre is also what leads to the general audience not enjoying it that much.
Some of my gaming friends played through the first Bayonetta once because hey, it's from the Devil May Cry creator! And they thought it wasn't that good and they'd rather play something else instead of playing it again (doesn't help that the style is a "hate or love" kinda affair. I love, but I also get why someone would hate it). Most people I know who played Ninja Gaiden gave up before finishing it once. God of War had the cinematic aspect, graphics, the violence and the - in comparison - more streamlined and simple fighting system which helped keeping a bigger audience while some of the fans of Japanese character action games disliked it for not featuring a similiar deep experience (while at no means a bad game, it doesn't scratch quite the same itch).
In a time where singleplayer games are a 'one and done' kinda thing for most people, it is difficult to create a game which is meant for replays. You can not really get both audiences. Of course you can try to throw higher budgets at the games and make them 20-30 hours per playthrough, but at the same time that is too long then for regular replays and the games will become repetitive and more difficult to keep them interesting. So currently you have to market a game which has a singleplayer lasting 10-15 hours for the first playthrough at regular retail price. Those games are still quite expensive to make, they are master class to develop and balance the gamplay - and it has to look good actually, flashy and fluid animation, ever-changing enemy and scenery designs that won't get boring after several playthroughs and look good to play and watch, epic super-sized bossfights are kind of a trope in the genre etc.. It's probably just not worth investing into most of the time for the niche audience still buying these games.
Sony probably saw it similiarily when they greenlit the new direction for God of War 4, which is a lot more on the pulse of the current zeitgeist whereas a "classic" God of War 4 might have felt outdated to a modern audience. We might get Ninja Gaiden 4, Devil May Cry 5 and Bayonetta 3, though, or so I hope. If Capcom can play their cards right with Devil May Cry 5 and gather a top-notch team for it, the DMC-franchise name might be big enough to pull in some new fans for the genre. But to be fair, I would love to see some new franchises in the genre as well (I still need to play Transformers :>).
(Same with Arcade shmups games actually. I remember legendary games in the 2D shooter genre getting bad bad reviews because "you're done in 40 minutes".)