JPEG 2000 never achieved the ecosystem support needed for cameras to adopt it widely. The main reasons are:

• Poor compatibility: it isn’t backward-compatible with ordinary JPEG, and support in web browsers, printers, phones, picture frames, and other everyday devices has historically been weak.
• Limited practical benefit: while it can compress better and offer lossless options, the real-world gain was seen as modest for most users, especially as storage became cheap.
• More processing required: encoding JPEG 2000 generally needs more compute time and power, which matters in cameras.
• High implementation cost: camera firmware, desktop software, and workflows would all need updating.
• Existing alternatives: photographers who care most about maximum quality typically shoot RAW, while standard JPEG is already “good enough” for convenience and compatibility.
• Adoption barriers: like many formats, it faced a chicken-and-egg problem—few devices supported it, so few people demanded it, so manufacturers had little reason to add it.

In short, standard JPEG won on compatibility and convenience, while RAW covered the high-quality end.