The problem lies in the fact that flappy paddle setups are getting better and better, plus more and more efficient. Manual transmissions peaked a long time ago. The new Porsche 7 speed is a weird duck, with rumors that it's not actually a mechanical shift pattern. I've driven one, and while I prefer it, I also see why folks choose the DSG for the 991.
I'd guess that if you compare F10 and E60 M5 manual sales, the take rate of the F10 will be much lower. I also suspect that removing the high rev nature of the older motors in the E60 and E9x M cars will also be partially responsible for higher take rates in two pedal setups. While your S4 sort of conflicts with my stance that flat torque curves aren't as much fun with a manual as a flappy paddle, I do think that take rates for manual S4's are lower on the B8 model than the B7.