Second, I've said for a while in conversations about the state of difficulty and the player base of the game, nobody actually plays Splatoon anymore. It's mostly limited to the highly skilled most devoted players. The fact that on an average NA splatfest means you run into a lot of people from Squidboards tells you just how tiny the player pool really is. It's a dead game aside from the hardcore in the same way Quake 1 is a dead game expect for the hardcore loyal that keep it going to the point of still running QuakeCon. But it's not mainstream, and id spends no time on it.
In Japan, it's still reasonably vibrant. But outside Japan it's a forgotten niche. We just don't have enough players to play it effectively in the west anymore, not as a splatfest, and Japan really didn't like the worldwide fest. So the fests can't go on. If I were to guess they were not expecting to end it. I can't imagine they'd have spent the time to revamp the entire splatfest system only to hold a total of 4 more splatfests per region.