Well … where to begin?^^
The reasons are probably that PVP since the launch of TSW always played a minor role as content in comparison to the dungeons for example.
The reasons for that are probably, that TSW once did put a heavy focus on PVP in its concept before the launch (-> there is a Dev-Diary-Video where Martin Bruusgaard talks about “[…]where Over 100 players clash over control[…]”) and “the secret war” (The Pre-launch facebook-app/ARG) beetween the factions, but i think they found out very soon, that the engine or the netcode (or both) couldn´t handle such massive numbers, wich maybe was the death-sentence for the Development-Focus related to PVP after launch.
Also PVP always had its problems and they were probably very hard to fix (mostly balancing- and game-performance-wise).
Also the PVPers and the Devs did not always have the best relationship to each other because of different reasons back in TSW.
And last but not least (Disclaimer: Speculation!): Funcom has statistics but it seems they don´t know how to interprete them properly.
They said they included Shambala in SWL with the relaunch because they thought it had been the most popular Game-Mode in TSW.
Shambala was indeed popular for a certain time when they introduced it rather late in TSW because the PVP-players were happy and curious about something fresh, so a lot of them played it when it was introduced.
Additionally Shambala had exclusive PVP-signets as a reward wich also motivated a lot of people to play it, because there was no other option to earn them ( Except the Auction house ).
BUT … the popularity of shambala was never related to the gamemode itself!
Shambala has a huge lack of tactical depth, the teams are random and it´s nearly impossible to talk tactics before the match begins. The matches are over way to quick, there is no respawning and the gamemode is very easy to exploit (aka: making the match ending early) when one plays it only for the rewards, wich are now nearly the same for winners and loosers.
99% of the PVPers like me (= TSW-veterans) never played shambala because it was fun. They played it because there were no alternative game-modes when it comes to PVP in SWL. Also some played it just for the shards (Wich is totally ok but says nothing about the quality of the gamemode).
And i think funcom still doesn´t understand that, because they just look at the numbers and not at the things we are writing here.
If they would, they would recognize, that nobody plays shambala currently because it is just garbage and even the last player has finally realized that.
But their interpretation probably is: “Nobody plays it so there is no interest in PVP in general”
And thats just wrong!
EDIT: Sawo also wrote a lot of true stuff!
EDIT: Who doesn´t believe me about the PVP-Focus pre TSW-Launch should watch this:
EDIT: Typos ^^