Here is how I see as to what happened, coupled with the anti-hunting VP at FLIR...
Well, no doubt FLIR's demise had been coming for a while, at least in terms of their civilian weapon sights. As best as I can tell, they really messed up with their initial introduction of the RS series (rubber coated square box) line of rifle scopes that were not a hit with the consumer market (circa 2014). The RS scopes were for the consumer market (not military). As I recall, these were FLIR's first sub $10K scopes, the rest being military or military intended scopes that trickled into the civilian market that ranged in price around $12-20K for the ones I was seeing. FLIR was attempting to compete with ATN that was still making a good thermal scope at the time and Armasight, the latter doing a lot of sales and using FLIR Tau 1 cores. IR Defense had just previously come out with their 320 resolution IR Hunter and within months of working out some bugs had a 640 resolution version that was pricey, but gaining in popularity.
Somewhere in here Armasight changed over to the FLIR Tau 2 cores and got an upgraded and more complicated firmware package that allowed users not to adjust the image by brightness and contrast, but by 3 other variables. It was somewhat ridiculous. Most users don't fully understand the extra adjustments and hence don't even mess with them.
Pulsar entered the picture with weapon sights and the civilian consumer market was getting really interesting. I actually got the first US hog kills with a prototype Apex 384 resolution scope in 2015 thanks to Pig_Popper who was my contact at Pulsar at the time. The Apex line of scopes were downright inexpensive and functioned well. I think they were $3500 or $3900 and the were of a quality that seemed to be punching well above their class.
IR Defense was bought out by Trijicon.
The RS line continued to flounder for years and then FLIR had this great idea of buying Armasight in 2016 for $41 million. Armasight had just had their own fiasco product launch with their pathetic Zeus Pro line of high dollar scopes that were apparently supposed to compete with IR Defense/Trijicon scopes, but were too big, used too many batteries, and had a crappy image much for the time. So Armasight was ripe for the picking. FLIR kept on Armasight employees for a couple of years, still making the Zeus and Predator line of weapon sights along with other Armasight offerings (but not the Zeus Pro, IIRC), upgrading and further complicating the firmware along the way and then giving birth to the new FLIR PTS line of weapon sights for the consumer market, only in 320 resolution, but with a 12 micron core that was an improvement over the 17 micron core. Two key players FLIR got rid of or lost were the Tarakanov brothers who had been with ATN, then moved to Armasight. This was a large part of the creative genius behind both lines of scopes and their loss from FLIR was not a good thing, but then again, the new PTS line of scopes were nothing particularly new or interesting. They were just an upgraded version of the original Armasight Zeus models with bigger lenses, more magnification, and unnecessarily complicated firmware. There were promises of a 640 resolution 12 micron core to come soon. This was to compete with the Trijicon scopes that were already running 640 resolution 12 micron BAE cores that were better than the FLIR's Tau 2 640 17 micron cores. Well apparently, FLIR had troubles making the 640 12 micron cores work properly. Pulsar had upgraded to also having 640 resolution scopes along the way, but ULIS (maker of the core) was not able to turn out a 12 micron version either. On top of that, ATN had moved a lot of their sourcing to China and had a new line of Thor scopes that had a bunch of features and were much less expensive overall. To compound matters, FLIR's PTS line of scopes was not hugely successful, fraught with QC issues and poor consumer acceptance. It was doomed to die without having a 640 resolution version. Never mind that N-Vision also entered the market with BAE cores that were kicking butt on anything FLIR could put out.
So in terms of weapon sights, FLIR was getting beat on pricing and market acceptance of their products and seemed to be having QC problems on par with ATN. Moreover, their customer service was found very lacking by those who needed to get their brand new PTS units serviced.
In the end, the PTS line of scopes was turning out to be worse than the abysmal RS line of scopes, but at least the RS line had a 640 version. So basically, FLIR simply could not compete. They hoped to beef up their product line with Armasight-type units but they screwed that up as well.