Good topic, I will thank you for opening it right after I explained my thoughts.
From my experience, the people that play serious competitive traditional highlander (read: not that commander crap...) are by far the "older" ones of the magic community(I personally can't think of a handful of people that are underage and seriously spent time for traditional highlander magic).
Unfortunately, all these 20+ year old people are either students or just on their way into a job which means they don't have the capabilities & resources to constantly participate in tournaments (because of final exams, academic dissertation, semester abroad).
Some of them already have children or a well paid job that requires work on weekends etc.
I for myself didn't participate in a tournament (usually Germany's Dülmen and/or Iserlohn) for more than half a year (even though I really, really wanted but I just couldn't affort to free up the time) because of things like that. Jobbing, studies, new & old relationships usually have priority.
But even before that I could notice a decline of players. In the middle of 2011, Germany's Dülmen was already missing too many players to make a Highlander event worthwhile for the tournament organiser (Trader online). Now, Highlander format is not offered anymore.
Only hope left was Iserlohn that now moves to Dortmund (which is pretty good for me), but I'm not sure if the new organisers will keep it for long. I really hope so, though.
In addition, there are more format related things that keep the declince going.
Powercreep level. Wizard pushes creatures' power over the top. "Play creatures yourself or die" is the motto (maybe with the exception of Oath decks, but some of them run a little 2/1 flashback human wizard themselves because it's just too powerful to not have it even though oathing into it might suck from time to time). Classic draw-go is not viable and combo often too inconsistent (or it's creature based and can beat the enemy down if needed, but no pure combo anymore).
But I still think something can be done about it via unbanning some heavy control (having E. Tutor on the unban watchlist is a big step into the right direction IMO).
Wizard's pushing Modern / Legacy format for the ones aiming to play competetively and if you want to have fun, then Commander is the choice to go (just because it gets so heavily promoted by Wizards and little kids seem to get attracted by the idea of summoning an uber mighty General that crushes their opponent's in their imagination).
And to make it even worse, Commander is multiplayer based which takes a lot of competitiveness from the singleton idea because you can now play a ton of CC6+ cards without getting punished (everybody and his / her mother runs 5+ wrath effects) and strategic diplomatic behaviour between the players matters a lot.
Last but not least, money makes or breaks a new highlander player. Many people don't want to spent hundreds or thousands of dollars on dual lands and mana drains (I can understand this though), just to play a DCI irrelevant format. For me, it was much easier to enter the format because I played Legacy for several years.
I had enough of Legacy because it was always the same (5-6 different decks to beat and some random tier two decks) and it has proven to be still be this until now (UW Miracles, Stoneblade, Maverick, Delver, Reanimator and Sneak & Tell are the current DTB in Legacy right now iirc and that proves my point). I wanted something more diverse but still competitive so Highlander magic was perfect for me, so I liquidized my Legacy pool and got me some nice highlander foil stuff I enjoy playing up to now.
In 2006 and earlier, you could have that near mint german limited Tundra for 30 Euro whereas it now costs five times that much at least. And paying three digit sums for a simple revised whiteboarded U-Sea doesn't make it easier for newer players.
I still spend several hours per week deckbuilding & theorycrafting about our traditional highlander format even though I didn't play a single tournament during the last 6 months or so (read above) and I believe that there are many more "sleeping players" like me. Just look at last years highlander german nationals tournament in Iserlohn: almost 100 of players from all over the republic being my best experience so far with this format.
The format is definetely not dead yet, it's just too focused on regions which is the 4th reason for the decline of players. I have no idea what I am going to do if the new Dortmund doesn't offer Highlander tournaments anymore.
I am studying in Osnabrück in Lower Saxony (part of Germany for those who don't know) and there is nothing traditional highlander related. I reapeat: NOTHING. In the game stores they have small groups of competitive legacy players and the rest of the customers are little kids that play commander.
No one wants to play more than 1 game against my competitive Highlander because they think it's too serious and "tryhard" (I have currently revived some UWG Oath version inspired by your
2nd place at HL GP 7), so my whole time at these game stores is spent on trading the new highlander viable cards in foil to add to my cardpool.
It's not even close to the good old times in 2005 at Dortmund's Auenland where every T2 / Legacy player had an almost fully pimped Highlander deck with him because it was just so popular at that time.
Well, for those that don't want to read the whole wall of text (a.k.a. tl;dr) here comes the summary.
Reasons to see less and less german highlander players.
1. Traditional highlander community pretty mature having less and less time.
2. Creatures' powerlevel is counterproductive to the format's deck variety.
3. Wizards pushes T2/Modern/Legacy for competitive players and now has EDH for casual players (read: HL lost its play niche).
4. Acquiring a basic & sufficient card pool for highlander decks became unbelievably expensive if you start from zero.
All this is creates a snowball effect that makes the situation worse and worse.
What to do?
I have no real solution in my mind yet. However, if we can keep the very big events going (national championships, Grand Prix, certain extraordinary events by certain sponsors like MKM etc.) and people actively join what's going on in the community (starts with active forum and tournament participation), I am pretty sure that we can still have a lot of fun with our beloved format.
Cheers.