That's one funny sentence you have there, OP. It's far from dead in Japan. And it never did that great here in the west in the first place to say it died later.
Here is the thing, and I say this as Pokémon lover, ok? I'm not trying to be edgy, just establishing facts: Pokémon is an incredible simple jrpg, and it was never that amazing either. People keep playing it because it's Pokémon. But the actual genre of monster catching isn't that popular. There will never be a "Pokémon killer" not because the new monster games are bad (there are some decent ones out there!), but because they'll never be able to recreate Pokémania. A damn good monster catching game can come out tomorrow and it still will be a thing only nerds/gamers play. Pokémon is part of popular culture now and goes beyond classification.
Yokai Watch did great in Japan because it panders to their love for all their classic myths and they love the cats. The games are extremely Japanese too, the first one is all about how they spend summer and it captures that feeling well (like needing to go out and catch beetles). That level of being "relatable" made it stand out from other monster catching games in Japan, and that is why nobody cared about it here. Yeah yeah designs are ugly, whatever, they are tons of games with ugly characters that did well anyway.
