One of the biggest problems was insurance.
By that I mean that the insurance companies didn't like the idea of a .50 ball being shot at a more reasonable speed like 380-400. If we'd been able to shoot at that sort of velocity then most if not all of the disadvantages of .50 would be negated without being any more dangerous - in fact the paint would go straighter. 50 cal at 380 wont hurt any more than 68 at 300 and wont do any more damage.
Here in NZ most RAM .43 players chrono at 380 as they consider that a safe speed. We don't have to worry about insurance so it just makes sense. Because of that .50 could probably have worked over here.
The other main reason .50 died was that it was marketed all wrong. Heck it was worse than the marketing for John Carter. They were busy talking about how .50 was going to take over the whole of paintball and become the new standard while making all kinds of false claims about it's performance. What they should have done was to market it for what it's actually good for: cheaper paint for field owners, and less pain for punters. Second to that the ability to carry more paint could have been marketed to players who need to lay down a heavy stream. Unfortunately they didn't do this preferring instead to treat us all like idiots and pretend the product was revolutionary. It was a massive marketing fail and I posted about it at the time (I have a marketing degree) but of course they thought they knew best.
Another area where .50 did actually make sense was milsim. It's a much better size for magfed markers, allowing more realistic looking markers and things like 30 round mags less than a yard long (unlike RAP4 and co). They must have known this, starting a brand called GI "milsim". The problems were several. For one, the brand focused on anything but milsim, becoming an extremely diluted brand that nobody really understood. For two, the 300fps problem mentioned above. For three, the whole idea was doomed because of their false claims in the first place.
And that is why .50 cal is dead