There might be an opportunity for forward-thinking shop owners and instructors to offer a more comprehensive OW course aimed at developing lifetime customers (recurring revenue) rather than just maximizing certification counts. Put students in drysuits and good-quality gear (including a bright primary light) from the start. Teach neutral buoyancy and failure management. Take them to a variety of shore dive sites. Add at least one boat charter so they can see more exciting stuff. Have an assistant constantly shooting pictures and video that students can share on social media. Of course this will take longer and cost more so fewer students would sign up, but if they have a good experience then I expect many of them would stick as loyal customers. I don't know if this would actually work as a business model but it would be nice to see someone at least try to keep the industry alive.
I do something similar to what you suggest and it's possible to do, but it's been slow to grow. The principal problem is the consumer often looks at certification like this:
I want to get certified ------------------> I take a class -------------------> I get certified
Having no frame of reference, and perhaps a bunch of friends who were trained on their knees etc., they look at the different shops and choose the one that offers the cheapest classes, or the one with the pictures of big classes on social media (Seeking social proof of a good program because lots of people participate).
They call around and their first question is, "How much does it cost to get certified?" They don't know what they don't know and most of the price shoppers will choose to get certified with someone cheaper.
The end result for me has been that the folks I end up certifying tend to be better educated and skew more female. I keep increasing revenues year over year, but the number of people I certify is very few compared to other dive shops.
On the other hand, the customers I have do continue on with other classes and purchase equipment - I'd say 8 of 10 do. When I taught for a standard, on-the-knees shop, maybe 1 in 10 continued on. . .