There wasn't really any singular issue that hurt the PS Vita's chances. There were several smaller problems which (in combination) contributed to its struggles.
This post sums up just about all of them:
PS Vita could've been a hit had Sony taken a few key steps.
1.) No Proprietary Memory Cards - This was unnecessary, and showed that Sony learned nothing from UMD and Memory Stick. Micro SD would've been a better alternative.
2.) If you had to use them, then don't price them way above standard - $20 for 4GB is laughable. These Cards really should've been $5-20 MAX.
3.) Market the damn thing - Even at launch, the Vita had barely any advertising. They should've ran a substantial ad campaign that demonstrated the console's unique capabilities, not put out 2 commercials and that's it.
4.) Get better third party games - Banking your system's future on a Crappy CoD spin-off instead of some decent exclusives or ports is laughable. Try to get better deals with third parties, and make sure to get the right games the PS Vita needed.
5.) Invest in more first party games - I get that Naughty Dog and the like aren't interested in developing for underpowered handhelds. But You should've found more developers who would support the Vita using PlayStation IP, and get some of your lower tier developers to make more games for it. Games like Gravity Rush and Tearaway should've been way more common than they ended up being.
6.) Don't compete with smartphones - Instead focus on what makes the Vita unique compared to smartphone gaming. Switch has shown that both types of systems can co-exist, so Vita could've done the same.
This is all what the Vita needed to have a better chance in the market.
The memory card issues (points #1 and especially #2) got a lot of attention in this thread, and other similar discussions. Sony could've gotten away with proprietary memory cards, if only they had priced them reasonably.
#3 was a
huge problem in the US. Sony stopped running TV commercials about 3 months after the system was released. The problem wasn't that a lot of gamers actively disliked the system--the problem was that so many people simply weren't aware of the system to begin with. Most consumers had no opinion (either positive or negative) about it, because they didn't even know it existed.
There were two other problems that (if Sony had addressed them) could have also helped, and I hope
Jubenhimer
doesn't mind if I continue the numbering from his post:
7. While the system has a great library of downloadable PS1 and PSP games, there were still many games that were unable to be purchased and/or downloaded onto the system. Some could be placed on a Vita using funky workarounds (such as downloading to a PS3 and installing from there), but some others were completely unavailable to Vita players, even if they legitimately purchased them for one of their previous systems. Many of these were for weird licensing reasons, or simply that the publisher never gave approval. Sony should've fought harder to ensure that 95% or more of those games could have been available.
8. There's a great non-portable version of the system called PlayStation TV, but it has even lower compatibility with downloadable PS1/PSP games. Again, Sony should have ensured a significantly higher level of game compatibility. Better yet, they should have enabled the PS Vita itself to connect to a TV and play its games that way. PSTV could have still coexisted as an inexpensive alternative for those who didn't care about portability (sort of like the reverse strategy of the Nintendo Switch Lite), but the Vita could have been a much stronger system if it also had TV connection capabilities on its own.