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I don't know what you mean by Overwatch... But the attempts I have seen, such as Toxikk, didn't work out because there was very little interest. It was an alright arena shooter with some rough edges here and there, but having been with that game since day one I can tell you that Toxikk died because there weren't many people interested in it. When they were forced to make it semi-F2P to attract new players the influx was there for a little while before everyone moved on to other things.
Arena shooters aren't popular because they're not easy to play and there is no progression system or loot crates to keep people. Today's shooters are more focused towards heroes and classes than putting everyone on an even playing field as weapon collection and map awareness aren't things your average player enjoys.
It's sad to see Arena Shooters shafted like this, but if there is no interest for the genre that's just kind of a done deal. How many RTS games do you see these days? Or Hack'n'Slashes? Fighting Games are doing okay for now but I would argue they aren't as popular as they used to be. A lot of genres in gaming have died because there is a more casual audience that wants the same thing fed to them over and over again.
Have you tried Planetside 2? It's not an arena FPS, but it's free to play and has Onslaught-like elements combined with RPG-like character leveling-up and advancement (you can use XP points to buy different/better equipment).
Onslaught is amazing. So is assault, I love the race maps as well as normal assault maps.
UT 4 does exist, its just some ♥♥♥♥♥♥ early access Idea that epic had that hasn't gained any ground. You can in fact go and play it now.
The problem was their projectleader and communications and descisions on day 1.
UT2004 was so cool back then because you didn't have any Online Shooters like Call of Duty and the like yet. Plus allot people had fun to MAKE Mods, and others to USE said Mods ... same with Maps and Models/Weapons. So many good Mods out there for UT2004.
So, and here i need to disagree ... there is no need to add a Progression System, or any Loot Boxes or such crap in a Arena Shooter ... it just has to be super open for Modding, Mapping and the like.
I actually stopped Overwatch ... because it was always the same, Blizzard is way too busy adding Dresses ... and new Characters so they can add MORE Dresses into the Loot Boxes ... and that in a First Person game where the only time you actually see your OWN Toon when you won.
They should have added a heck more MAPS ... i got bored not because there where not enough different Characters to play ... but because i always played the same Maps.
In UT2004 there where new Maps released on a daily/Weekly base ...
For example one EU ONS server is that one:
Forum: http://www.ceonss.net/index.php
Steam: https://steamcommunity.com/groups/CEONSS
Discord-Invite-link: https://discord.gg/X4V8THM
Epic should release patches for all UT games removing every single mod apart from DM, 1on1, TDM, CTF and their instagib versions.
Clearly you have the perspective backwards. If that were truly the case UT4 would not have died on the vine, nor would Toxikk and Reflex Arena.
Arena Shooters died because "gamers" are more casual and hate having to learn new things. The RTS genre met the same fate.