Recently, a Youtuber named Glass Reflection posted a video talking about why mecha anime have declined in popularity in recent years.
In summary, he believes that the genre has exhausted itself, that the major franchises Gundam and Evangelion have crowded the genre out, and that audiences have become disillusioned with the idea of a spacefaring future.
All of these are sound reasons as to why the mecha anime has fallen out of favor. However, I believe that there is a far simpler reason, one that has nothing to do with stale plotlines or long-running franchises.
The lack of children is the major reason for mecha anime’s decline.
Remember that the earliest mecha anime — including Gundam — were intended to sell action figures and model kits. Who plays with such things? Children. And as the graph indicates, Japan’s total fertility rate has sunk far below the replacement level of 2.1 and never even come close to reaching that level again, post-2004 uptick notwithstanding. I even began the graph with 1973 because that was the first full year of the release of Mazinger Z, one of the earliest mecha series in which the suit is piloted.
This also explains the nostalgia that Glass Reflection pointed out; with so few kids to market to, studios have to cater to older fans who grew up with classic shows just to make any money.
From the looks of it, studios have largely given up on the genre. Its previous audience has disappeared, and the otaku audience is showing signs of strain. It’s Gundam and Eva all the way down.
(As a side note, I believe that magical girl shows declined for the same reason. It is no accident that My-HiME, an anime that eschewed most of the standard genre tropes, came out in the 2000s, and the 2010s hit Puella Magi Madoka Magica was as dark as it was.)