This is the same kind of mentality that thinks if a game doesn't sell Call of Duty numbers nor is the hot topic among zoomers, it's a failure and wasn't even worth trying. Fighting games don't need a "breath of life", their nature as a 1v1 game is in itself a major gatekeeper. if you lose, it's because you suck and your opponent was. There are co coping mechanics to fall back on other than the cope you make in your own mind, and that alone is a huge barrier to entry for newbies. If you want to become good at fighting games, at some degree of self-reflection is required and most normies don't even have an inner voice (allegedly).
What fighting games need are strong communities; a good netcode basically expands that community with literally no downsides. It's not irrelevant, good online is the bare minimum a game needs if it wants a community in the modern age.
Fighting Games are a "failure" because the new games should be better and more innovative than the old ones, not worse. Strong communities aren't going to form around mediocre games.
Losing in a fighting game (a modern one) isn't about self-reflection - it's about literal comeback mechanics. Rage Mode in Tekken, the Ultra meter in SF4, the V-Trigger in SF5 that all reward bad play. It's about a marked shift from a "neutral" style in older games to "rushdown" in modern ones, with a deeper focus on offensive options and a loss of defensive ones. Games being changed to be more "exciting" and away from being more "fair" is pretty central to the decline of the genre and has 0 to do with netcode.
Netcode
is important, you're right, but it's still a bandaid. It doesn't matter how good the netcode is if you're making a game that people don't want to play or play often. Do you think there's a huge EX Layer community still (if there ever was?). Soul Calibur 6? Samurai Showdown? Any of the Persona Ultimax Games or BBTag?
Sure fighting games might not have the audience of a big normie release such as fornite or minecraft, but it being niche doesn't mean it's dying in any way. In fact, despite what you say, Tekken is still very popular, DBFZ had it's biggest concurrent playerbase since launch (a full 3 years ago, mind you), and Strive just came out a few weeks ago to 30000 players on steam alone. Fighting games are not by any means dying.
Strive is just the "new thing" that's going to be fully dead in a year or two and mostly dead in 3 to 6 months. I'm glad DBFZ is popular, but I'd have to imagine a lot of that success comes from MVC3/MVCI being not very good.
I'm not saying that every Fighting Game needs to be Fortnite/Minecraft, but I think it's a bit out of sorts to say "this entire genre needs no innovation". There's a pretty clear reason that when you ask someone to tell you what their favorite fighting game is - it's
usually an older one (Third Strike, Soul Calibur 2, Tekken 3, Marvel vs Capcom 2, SF2 Turbo, or something else).
Older games can't carry the genre (and they clearly have a shelf life) and the newer games are missing the mark - regardless of the netcode involved. In a perfect world - we'd have really good games with really good netcode, but I think the core game is much more important.