The linked article mentions LFR being added with this statement:
“In 2011, raiding was a relatively niche activity, largely limited to organized guild groups that expected a fixed raiding schedule, and pickup groups doing current content were nonexistent on most realms. Thus, the development team introduced Raid Finder towards the end of Cataclysm to make raiding more accessible, despite recognizing that it would weaken some social bonds, because so few people were actually getting to face the Lich King or see Ragnaros after playing through Molten Front content.”
That seems to support the claim LFR was added to increase the number of players raiding, which suggests ‘not enough players’ was an issue in Blizzard’s view.
Personally I feel they should have combined LFR / normal years ago, and used the SoO flex queue system that allowed a premade ‘normal flex’ group to queue for each wing individually.
Edit to add: When they added LFR in Cata, many servers were dead or dying and little of the cross realm stuff we have today was in place - so of course pug raiding was dead on many realms (heck progression raiding was dead on many servers - I moved to A52 in late Cata as it was nearly impossible to keep backfilling our raid group) on a server where Horde population had died).