There isn't going to be a single answer to "why is the Church on the decline". It's going to be a highly complex and multifaceted reason.
The internet was mentioned, and yes people having access to many more views than in previous generations certainly does play a factor in that--in a lot of ways I imagine. Collusion between politics and religion is another, as that inevitably breeds corruption.
Decline in a particular view of hell probably isn't that important, though it could be a factor of why some people who in times past may have remained religious at least outwardly out of a fear of going to hell would no longer do so.
Diversity is another factor, along with the internet people are coming into personal contact and making interpersonal relationships with many different people with highly diverse views. Half a century ago it was a lot easier, if you grew up in a small Baptist town in the American Bible Belt to basically only know other Baptists, and the most diverse things got was those funky Methodists or Lutherans down the road. But those same small towns, while still mostly what they were, are certainly more diverse now than in the past.
Note, that some of these factors are not themselves bad whatsoever. There's nothing wrong with a more diverse experience of people, or learning about what other people think and believe, and with getting to know different sorts of people. But it certainly will play a factor in why some people, perhaps unsatisfied with their childhood religion, seek out something different.
People reacting to highly strict, legalistic, or otherwise authoritarian religious environments are also going to play a large role. Many of the people I have known who have left the Christian faith did so as a response to very ugly, very abusive, and very harmful churches and church experiences.
Additionally, related to all of these things, people are going to learn some pretty ugly things about history. Christianity was official religion of of kingdoms which engaged in colonizing and genocide--Western Europeans conquering, destroying, and slaughtering indigenous peoples all over the globe; and the onset of racialized ideologies that promoted superiority of a "white race" that was civilized and Christian over and against the inferior and "uncivilized" non-Christian peoples they encountered in the Americas and in Africa. It's not too hard to conceive that many associate Christianity as "the religion of colonizers and enslavers", rather than the religion of a handful of Jewish men and women preaching the Gospel of Jesus. For many, when they think of or look at Christianity they don't see the cross, they see the sword. They don't see that God is on the side of the weak and the oppressed, they see the strong dominating the weak, the wealthy punishing the poor and the hungry. Because if one looks at "Western Christian Civilization" as an historical concept roughly encompassing the period of history from the late 15th century until present day; it's been a fairly ugly, brutal, violent, and un-Christian (I'd dare call it antichrist) kind of civilization.
Those are just a handful of things I can think off the top of my head, and there are certainly dozens, perhaps hundreds, of more interconnected factors playing a role.
But one thing that should be evident is that we bear accountability for how we represent Christianity to our neighbor. And that should drive us to humility and a spirit of repentance. We are to be living epistles of Christ.
-CryptoLutheran
