As a member of the executive management team of a mid sized business, I reckon it's no surprise things have gone they way they have - but don't necessarily think it's been proactively driven by senior management! First thing that comes to mind when reading this thread is "it's all fun while nobody gets hurt...."
As a business we're constantly advised by legal boffins that we have a duty of care to ensure employees don't harm themselves - whether this is at work or at a function organised by the company, like a Xmas party. It's not enough to just assume that mature adults will be responsible when drinking without politely reminding them. It's not enough just to verbally remind them once, and to show due diligence we're advised that we need in writing to articulate the expected behaviours leading up to an event. But provide alcohol to staff, and you need to ensure they get home safely. It's not enough anymore just to assume people won't drink and drive, so we provide cab charges for people to get home safely. Provide cab charges to 100+ people and you can imagine it's start getting expensive.
Factor in the cost of putting on a Xmas party for employees and their partners, the legal implications and obligations of the company, then the 10% of staff who complain about the venue, the food, the entertainment, the location, the timing or the fact that they have to pay for a taxi to get to the place if they want to drink...... It all starts just getting too hard, and it's no surprise that the traditional Xmas parties for many companies have gone the path they have.