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1) we can see that players begin to drop off as the streaming of the game drops off: https://steamdb.info/app/975370/charts/ correlation may not be causation here, but it is something to thing about. I also think a lot of it is people seeing the game and thinking it looks awesome after watching someone else play, but then finding it difficult to play/proceed on their own and so dropping it.
2) (and this one is more of a guess as I didn't play the original version) This version of the game isn't yet up to date with the original version and is missing a lot of features, so many of the long time veterans are probably still on it until this one gets updated. Likely kind of like how skyrim SE was dead for a bit compared to oldrim for many of the verteran players before the modding community caught back up to it some time later since they didn't want to give up the features they came to know and love.
Also, it seems to be peaking at about 10k concurrent players a day recently which isn't terrible by any means. AoE2 "only" has about 2x as many players online a day and has also been around for 2+ decades like dwarf fortress (a bit longer actually), and so there is definitely precedent for continuing a game over the long term even if it isn't a game that nets 100,000s a day.
You can really tell when someones new huh lol, this game is 20 years in the making, its a passion project, there could be literally nobody playing it and it wouldnt effect development of the game.
As for why people stopped playing its the same reason for any new release, the hype died down and people move on to the next thing, no game hits a resting point at its peak players.
Its not a MP game where it matters how many people are online and playing
New graphics are always welcome, but it is hard for me to trade to a less feature filled version of a game for that alone. I eventually migrated over to SE when a number of my core mods were updated and I just really wanted to break free of the old edition's aging 32 bit engine that was causing crashes.
I see this heading in the same direction. Looking at the dwarf fortress Reddit it is clear that many are still using the classic version too as I see them mentioning things I can't do yet.
Usually, most games end up kinda dead after half a year+, games like this probably will never die and sometimes start to, slowly, gain new players over time reaching higher average numbers every year, it happened with some total war games, some paradox games, rimworld, etc...
Don't know if the numbers will actually increase for DF, but at least I know some people have been playing for many years and there's no reason for them to just stop now.
As for the question itself, if I were to guess I'd say most people just got tired as they've already seen all/most of the content of the game by now and, most important, the game doesn't do the players any favors, the UI and menus are horrible, and dealing with a constant landslide of massive gamebreaking bugs every hour can be a huge turn off for most people, most games that get ♥♥♥♥ from their playerbase for coming out too early, being too unpolished or having far too many bugs/issues to be considered playable, like Imperator, WH3 and Victoria 3 don't have even a tenth of a fraction of the number, and severity, of the bugs & issues found in DF, even though the forums are full of people asking for help on how to deal with several bugs, I'm honestly surprised there aren't a lot more threads about those issues.
In terms of quality, features, menus, UI, and bugs, I don't think I've ever seen a game launch this bad other than maybe Rome 2.
Bruh, people have lives to live, and sleep must be slept.
Just like any other game would anyway.
Besides, there's also an important factor where people have lives.
The game was a sound success and there's proof that people want to play Dwarf Fortress. From those who stopped playing, many can be recalled back again through new patches - mainly bugfixes, QoL and features.
If anything, a not-so-severe drop in players motivates more development, the potential is there and the game is far from dead. You need to see the difference between a 50% drop from 20K to 10K and a drop from 2K to 1K - drops like these are always to be expected, but the 10K playerbase is way healthier than the 1K one. The initial success means a lot.
Also, the dev has made clear that he released the Steam version "unfinished" just to be able to gather funds already. He did so and quite succesfully; which means that we can expect for him to finish porting the game to Steam as promised - and probably more.
Building is just such a low priority and there's no way to say "Do this extremely important thing right now." I even made a burrow around the area so dozens of dwarves were on hand and excluded all other labor besides building- the priorities are just useless. They just loiter around and by the time one of them goes for the wall that needs building it's been a day and the pumped area is magically filling up again faster than a team of pumps can drain it.
The reason this dam needs to happen is because an underground river is flowing into another underground chamber that has drainage, so both map's water is going crazy and slowing the game to a crawl. Takes hours for a season to pass. I love this game, but I'm so done with this ♥♥♥♥.