Rakugo is sort of unique, culturally speaking, in that it's largely considered a classical, or at least old-fashioned, performance art, but it's still one that's meant to be unpretentious and entertaining. That puts it in kind of a difficult position, though.
More serious classical arts, like kabuki and noh, or, for Western examples, ballet or live performances of Shakespeare plays, can benefit from being high-brow, "important" things. Many people enjoy them strictly for what they are, and even for people who don't find them to exactly meet their entertainment preferences, there's a sense that knowing about them and experiencing them makes a person a more cultured, refined individual.
Rakugo doesn't quite have that same benefit, though. It's definitely old-fashioned, and there's a general consensus that it has value as an indigenous, traditional Japanese performance art. But because it doesn't have as much of a sense of importance as the other art forms I mentioned, the question of "Will it be entertaining to watch?" becomes more important for people in deciding whether or not to watch rakugo. Unfortunately, rakugo often boils down to telling old-fashioned stories in old-fashioned ways, which usually isn't a very appealing combination for young people who're looking for entertainment.
Rakugo has been enjoying a bit of a revival in popularity recently, but like Uco mentioned, most enthusiastic fans are older. If you were to grab a random group of Japanese people who're all under 40, I doubt very many of them would have ever seen an in-person performance, nor would any say that they regularly watch recorded/TV broadcast rakugo either. Likewise, if you asked the average young person who their favorite rakugo comedian is, or what their favorite rakugo story is, I doubt most of them would be able to give you an answer, but would be able to tell you who their favorite TV comedians and comedy YouTubers are.
Overall, among young Japanese people, I think the general feeling is "Oh, yeah, rakugo seems kind of retro-interesting, and is a part of Japanese culture. I've never gone to see it, though, and I don't have plans to either."
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