They almost took off in the UK - popular music/video shops like MVC stocked them for a while, but the CD-i players were just waaaaaay too expensive (and poorly marketed by Philips).
The UK markets ditched VCD as a format in the mid to late 1990s and the likes of MVC then dumped all their stock at around GBP5 or so per title - great for the likes of me who had picked up cheap CD-i players that nobody else wanted!
Hisoft also produced a VCD add-on, the catchily-named SMD-100. I was one of the two or three (!) people that bought one! It was a black box that plugged into a SCSI CD-ROM drive and contained a SCART socket for the telly. It also had a genlock connector and Amiga-compatible software was promised to make use of all that - which predictably never materialised...
VCDs are still alive and well in Singapore - or at least they were a couple of years ago when leaving the UK to come to NZ. There were/are at least two shops in the airport selling them alongside DVDs...
I still sometimes dump stuff to VCD format, but do it less and less now that writable DVDs are so cheap. I only really use it now to send "video messages" back to the UK now and again.
It's also useful to get loads of stuff on to DVD at reasonable quality. MPEG1 352x288 (PAL) / 48KHz audio (which is close enough to VCD specs other than VCD's 41.5KHz audio and some minor GOP/header differences) is good for bulk dumping to DVD, giving up to 7 or so hours from a single layer DVD whilst still giving better than VHS quality, especially if such material is DVB (DSAT or DTT) sourced. And that's part of the DVD spec, so plays on all DVD players (or at least should do!).
- Ali