There are a number of reasons…
Accessibility. Most arcade owners know that an MvC2, CvS2, or whatever hot SF machine will generate money. They’d be more skeptical about KoF machines, because seriously even at arcades I frequent WITH KoF machines… the traffic they get is probably 10 times less. For the most part at an arcade, an MvC2 machine on a weekend, or at least a peak time will have traffic pretty much until closing time. Not so with a KoF machine. Every arcade I see with a KoF machine… that machine always has idle time, unless some guy is playing against the CPU. Thus, there will be more arcades that will not have a KoF machine, but still have an SF machine. When there are fewer machines, there is less accessibility and not as many people begin playing, and then there isn’t much motivatin to really play it competitively.
First mover advantage.
Brand equity.
Capcom broke out with SF2, everyone flocked to it, everyone loved it. Whenever you think about a cola soft drink, what’s the first name that comes to mind in 98% of the population? Coke. Whenever you need a paper tissue to blow your nose, what’s the name that pops into mind? Kleenex. Whenever you need to use a yellow sticky thing to post up on a board, what name do people think of? Post-It. Whenever you need to make photocopies of something, what name come to mind? Xerox. Whenever someone mentions “fighting video game” in the US… what name do most people relate that with? SF.
Capcom broke the mold with SF2 in the heyday they struck first and struck gold. KoF came later as a follower, and while it does good internationally, because fighting games are still popular offshore… the presense of so many other games around here by US companies caused the fighting game interest to die down, and the followers took the hit harder. There’s probably debate of “which game got released first” but it doesn’t matter because SF2 made the biggest impact. While the SF scene is pretty bad as well, they still get mentioned because they’re still living off of the brand equity they created from their success when they had SF2.
The fact that Duo Lon has an infinite in KoF2k3 doesn’t make people stop playing it, because people still play MvC2 even though they fucked up and got AHVBed 3 times and it’s all due to the brand equity status that Capcom built up from the beginning.
No one really cares about “graphics” or “gameplay”. Those things aren’t exactly the straw the breaks a camel’s back. People still eat McDonald’s despite the fact that there are probably many other better, cheaper, healthier alternatives. The graphics can continue to suck, not get any better, but the mindset ever since SF2 is that the success of it made people more trusting of whatever new game comes out because it’s the same company, so they give it a better shot. When CE comes out “Ooo you can play as the bosses!” and it’s just that the strong hold they had over the market is what allowed people to stick around and not really lose too many fans to their competitors, because KoF was merely a follower, and people were just too used to playing SF. The fighting game market was already established with the presence of SF because Capcom obviously struck first and stuck the strongest. While KoF was new and tried to be more innovative, the differences it had from SF didn’t detract enough SF fans away from playing SF.
More than 90% of people browing the internet use IE. Many users of Firefox, Opera and other browsers will argue strongly that they stopped using IE, saying IE sucks and everything. Everyone still uses Windows, and Linux users will admit proudly they use Linux, saying Windows sucks and everything, and arguments against Windows and IE are clearly valid. But people will still continue to use those products, because of the strong hold the company has over the market. That’s what Capcom achieved with SF2.
To me, in the US, SF = Windows, KoF = Linux.