The hype is fading because it was vastly overhyped and oversaturated to begin with. Games that should have never been made esports were turning into esports. One end of the spectrum was just bad games getting esports leagues prematurely. Remember Infinite Crisis, the DC Comic-based MOBA that had a full "season 1 championship" in beta, then the game itself ended up lasting only 5 months before getting shut down?[0] On the other hand you have games that are popular, but are really bad spectator sports. Fortnite and Rocket League are great examples of hugely popular games which have attempted an esports scene but failed to gain much traction, especially relative to their popularity. And then there's the ugly, which is Blizzard's massive investment into Overwatch League. Despite all the shady metric-gaming in the books (they used to automatically embed OWL Twitch streams into the Blizzard launcher, meaning anyone who launched a Blizzard game while OWL was happening counted as a viewer) OWL has looked pretty bad. They've even had to change the game rules multiple times to "fix" staleness in pro play, and Overwatch 2 is heavily targeted at adjusting pro play as well.
You can't just throw money at a game and have it become an esports phenomenon like Blizzard has tried; a lot of things have to go right with the game itself. The map and game state has to be easily readable to a viewer, which is why MOBA, RTS and fighting games to a lesser extent have done a lot better than FPS historically. The balance needs to be there; the GOATS[1] (3 tank 3 healer) setup in Overwatch made the game miserable to watch. The pacing needs to be right; it can't be too slow-paced or too fast-paced. This includes both any fighting that happens, as well as the overall pace of when fighting happens. If any of these factors aren't quite right, pro play is going to be a mess.
And sometimes, even with all those boxes ticked, it just doesn't take off. Heroes of the Storm is a great example here, where it was mostly pretty good as an esport on paper, though perhaps a bit slow-paced with too much healing. But the game never really took off in popularity and thus Blizzard killed its esports league.
Investors get tricked into thinking they're investing into the NBA or NHL with esport pitches, when in reality they're investing into the XFL, USFL or a lacrosse league.
[0] https://en.wikipedia.org/wiki/Infinite_Crisis_(video_game)
[1] https://www.polygon.com/2019/2/25/18239845/overwatch-goats-m...