2D is cheaper. The problem with it is that it takes more time to animate, whereas a 3D movie can be shit out in a year, 2D takes much more time, which kills Disney and others’ yearly release schedules.
2D also died due to Pixar and DreamWorks. Thanks to Disney shitting out some awful movies in the later 2D years, while Pixar and DreamWorks were killing it, 2D became animation suicide unless tied to a tv IP. Maybe if 2D animation expanded past Disney and Disney-lite (Don Bluth), then it could have stuck around, but the lack of true competition in 2D meant that when Disney shit the bed, it would die with it. TV never had the same issue as Warner, Viacom, Ted Turner, Fox, and so many others were able to compete or even dethrone Disney in the space.
Say what you want about 3D animation, but it had a way healthier competitive space than 2D, what with Pixar, DreamWorks, Nickelodeon, Blue Sky, Sony, Illumination, WB, and more all getting decent attention.
Toy Story and Shrek are the reason. After years of being the top dogs and treating animators like shit, the hatred animators had for them finally came to bite them in the ass. Pixar and DreamWorks made Disney films look like shit and DreamWorks especially was hell bent on fucking Disney. By the end of the 2000s, it was pretty clear that Disney adapts or dies as shown by the Princess and The Frog’s poor sales. Tangled was essentially the Shrek-Disney film, as it took tons of cues from DreamWorks and Wreck-It-Ralph was a Pixar film just under the Disney animation umbrella.
The 2000s era sunk the Disney ship. Even the films based on fairytales from the 2010s weeks heavily influenced by the previous era. This isn’t all about Disney going woke, this is Disney needing to adapt to survive the competition they created after years of ego tripping.