Part of the reason many niche markets exist is due to a need for domain knowledge, be it about the product itself, or the particular community you are servicing

Part of the reason many niche markets exist is due to a need for domain knowledge, be it about the product itself, or the particular community you are servicing. I would argue that most niche players have either or both of these attributes, which allows them to hold their ground against would-be competitors. If domain knowledge is the main barrier to entry, the competitive advantage is not the fact that it's a niche, but the fact that you know something that your competitors don't about that niche.