I strongly suspect that the potential for SE to make money managing the sites themselves was much greater than the potential letting other people manage them, and paying SE a fixed cost per month.
There were many sites that were successful in their niche, which are cash cows, such as moms for moms, gaming sites, etc. The people that started them would have been only too happy to pay SE and make the money off advertising and referral links. Many of them created their own places using clones, in fact, and are doing well.
I believe it’s because they chose to do closed source, and keep everything under their wings that things didn’t take off nearly as much as they could have for the platform, but it probably was the right business decision. It doesn’t benefit the community as much as it could though.
But there are many successful businesses that host forum software, so we know there’s a market. Further there are several businesses that sell forum software, so we know there’s a need for good software that is under continuous development.
If anything, I think the business case for discourse is stronger than the business case was for SE at the start.
But I don’t think SEv1 failed. I think it was actually too successful, and was yanked so it could be made more profitable, rather than the other way around.