Simulations aren't dying off, they're just changing shape.
Before, simulations were designed by small developers, then distributed by big publishers like EA, Sierra, Ubi, and so on. The big publishers have moved on, but the small developers are still there. Instead of getting big publishers to distribute the game, they do it themselves now. The result is fewer copies sold, but also higher quality games.
For example, EA published a series of F1 sims made by ISI. When EA lost the F1 license, they cut ISI loose. ISI stayed together and made rFactor. Similarly, Papyrus made NASCAR sims for Sierra. When Sierra lost the NASCAR license, Papyrus became iRacing.com and produced their own sim.
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