Some seem to work a little like what you say, UVIs for example decrypt libraries against the ilok, and R2R has UVIEMU for that, but clearly it's not sufficient to crack all ilok plugins that way, or Softube's wouldn't remain uncracked.
And since ilok doesn't require a dongle anymore - there are machine and cloud licensing options too, and developers can opt in or out to each of the 3 license holder systems...
The market for that is tiny compared to music but, the money made basically guaranteed given adoption rates. Even today I think there are too few contenders to pose a significant market risk to these companies.
From a consumer perspective hardware dongles are mega-problematic right now because of the USB C vs USB A debacle on new laptops, and also because many AVs now block USB devices by default and require ITS admin to unblock it.
From a distributor perspective, they require shipping physical product to customers which reduces margins and can take weeks, especially-so when you talk about shipping from overseas.