Kinda wonder if they took the wrong message from last year's battle pass shortcoming. It was late and the big rewards were so deep that I'd guess a lot of people just said fuck it. I don't think the drop of 50% in a single year is representative of declining interest in the game but rather they were asking too much and giving too little time to obtain whatever without dumping hundreds of dollars.
You would pay actual money to go to a venue and watch people play video games? Are you actually fucking retarded? I have some ocean front property in Nevada for sale.
In general I never got the appeal of watching esports, let alone paying for them. At least physical sports have people reaching their limits, and larger than life personalities. esports is walking mental health statistics decked out in globohomo gear staring at a screen.
A lot of fighting games have the same issue that you mention: they're bound to play what the casuals play, since that's where the money is, so it seems like the players flock to the latest iteration of whatever game every few years. RTS has the distinct advantage for once of being a dead genre, so its standout games are all 20+ years old at this point, although the same point does still hold - the casuals play LoL and DotA and so that's where the money is.
Overwatch really just doesn't make a good esport, too much of the game is resolved through ultimates. Its really hard to constantly hype up people just running up to the enemy and pressing Q. The game favors flashy effects over visual clarity, making watching it, especially with stream compression, near impossible to decipher.
It's def not dead, it just never took off like people figured. Valorant just had their big tourney and it was a pretty big deal and leaked into mainstream normie media a bit. But a few years ago you had ESPN pumping it and people were saying kids were going to start jumping into e sports and the money would be huge and blah blah blah. Pandemic ended up and some people just probably started touching more grass.