That's because there was almost ZERO innovation done on this product. Very few (mostly visual) improvements, and very few new features. The latest posts on Google Reader blog are from 2011 http://googlereader.blogspot.com/
Google shapes the way many people discover, use and keep information (google search, maps, news, finance, gmail, etc). To let Reader languish then kill it because "usage has declined" is rather self-fulfilling. I bet if they didn't update their satellite images and road data, Maps usage would decline as well.
They could have been working with the community to define new standards - tags, markup, etc - to allow richer interaction between rss readers and sites (thinking geoloc micro format work, and other semantic markup work in recent years). Making 'reader' a first-class citizen in its suite of services, then using interaction data as more relevance signaling seems like an evolutionary step that only a handful of players the size of google can make good use of, but apparently in their infinite wisdom, they'll just shutter it.
Now it's all multiplexed into their G+ timelines and I happen to catch about a third of it in between their useless updates about being in a park with their kids or a new funny meme.
If usage is declining with nobody stealing users, it's less a sign that innovation stopped than the overall market demand started shrinking. In which case, adding more features might not make a ton of sense. There's not a lot of business sense to investing more in capturing a larger share of a declining business.