KDE is not dead at all, not even by a long shot. I'm using the latest Plasma 5 desktop in Slackware (current) and I find it lean, fast, and quite stable.
I think the problem lies in the fact that the codebase is quite big and the developer base is shrinking. There are not many hobbyists working on it right now, and there are simply no distros sponsorinng any paid developers to work on KDE. The result is that there are a lot of emblematic KDE apps/frameworks which still need to be ported to Plasma 5, such as Kile or Krusader, KHTML, or Reqonk (some may say that some of those apps/frameworks are already ported but there are no releases of them). One by one, the applications and frameworks get abandoned.
Among the latest to suffer this behavior was KDE-Telepathy, which is right now losing its maintainer.
So, there was a time where several distros sponsored some developers, and there were also other high-profile developers working on KDE as a hobby. These got new jobs, so their involvement in KDE had to be cut, and there was no replacement in sight.
I think KDE is trying to correct the problem. They are a good community, but to be honest, it is a difficult process.