Gaming companies contributed to the death of LAN parties too. They killed the "split-screen" gameplay that would support 2-4 players on the same machine. They wanted each player to require their own copy of the game. They killed LAN support, forcing you to play on their servers. Culturally we saw a shift towards social isolation. People are more comfortable talking over a mic.
LAN parties used to be the only way to play together because playing over the Internet wasn't practical. Once that changed, it was so much more convenient to just play over the Internet, that the demand for LAN parties dropped quickly. From my memory, companies ending LAN support came long after LAN parties were mostly done for the experience and mostly by people who had done them before.
Now you need all the friends to buy the same (usually expensive) game.