There's a lot of reasons Amiga/Commodore failed, but I think the core issue is that they were creating computers, but not ecosystems. No one wanted to do a full reset on their software again, something 80s computing was rife with.
PCs insulated themselves from this with hardware variability being baked in the moment PC clones appeared on the market forcing the software market to bake compatibility in by design (the bet on x86 was also a smart one). Macintosh managed to survive the transition by forcing developers to use abstractions, making a 68k>PPC emulation layer more viable.
There was no pathway for Amiga to accomplish this. So much software is direct to metal that the only feasible way to achieve performant backwards compatibility would be to include a whole OG Amiga in whatever PPC Amiga they could cook up. Expensive in an environment of 486+VGA IBM PC compatible clones that work with existing software but even faster.
Not to say this was the thing that killed them, but it would have been even if everything else was going great.
This is just layers on layers of hypothetical. One could just as easily argue that since they controlled the architecture vertically, they could have virtualized the whole platform. (Exactly like how Sony made PS2 compatible with with PS1, and PS3 compatible with PS2.)
Sony could pull that off due to their licensing model allowing hardware sold at a loss, being a massive conglomerate sitting in many different industry also helped. There was no pathway for Amiga to do this, they had vertical integration but not the control over developers Apple had nor the licensing income console manufacturers had.
Commodore had it's fans (well, not of Commodore so much as the Amiga itself) and a bunch of niche use cases in the video production industry, but that wouldn't have been enough to sustain the R&D required to be competitive with the rest of the industry. By 1993 a lot of the industry was working on consumer targeted 3D acceleration and here's Commodore making some 2D chip.
Sony's backwards comparability was nearer to the "include the old chips in the new system" approach that a hypothetical next Amiga would probably have to use, at least for the immediate previous generation (PS1 on PS3 is emulation AFAIK[1]). It's not a good sign for that approach that the PS2 chips (and compatibility) were dropped pretty much immediately once Sony realised they needed to get PS3 costs down.
[1] I think some download games use a PS2 emulator on PS3, but that's not available in a general purpose "put any disc in console" mode.
PCs insulated themselves from this with hardware variability being baked in the moment PC clones appeared on the market forcing the software market to bake compatibility in by design (the bet on x86 was also a smart one). Macintosh managed to survive the transition by forcing developers to use abstractions, making a 68k>PPC emulation layer more viable.
There was no pathway for Amiga to accomplish this. So much software is direct to metal that the only feasible way to achieve performant backwards compatibility would be to include a whole OG Amiga in whatever PPC Amiga they could cook up. Expensive in an environment of 486+VGA IBM PC compatible clones that work with existing software but even faster.
Not to say this was the thing that killed them, but it would have been even if everything else was going great.