It's not dead as a genre, but I was in a conversation the other day on the Fediverse -- don't remember whether it was this community or not -- trying to figure out what happened to the space combat genre. One guess was that it was just a really good match for the hardware limitations of the time. In space, there often isn't a lot of stuff near you, so you can get away with making 3D games that don't have to render all that many objects. And they were popular in the early days of 3D hardware, around the late 1990s and early 2000s. So maybe some of it was that developers would have done other genres, but that hardware limitations pushed more towards space combat.

I think that some of it has to do with a sort of societal interest in space. In the 1950s and successive decades, humanity entering space was very new, was a completely new frontier -- maybe a frontier that no life form out there has ever crossed the barrier on. People liked theorizing about what society in space would look like, and so you had schools of architecture that alluded to it, comic books and novels about it, and then later movies about it, and later video games about it. But maybe space just isn't as novel any more, is part of ordinary life. The video game genre tended not to be hard-realism, but adopted conventions from movies and TV series, like slowly-moving visible laser pulses that make a distinctive, synthesized sound, ship orientation changing ship direction of travel, objects like nebulas based on false-color NASA images, audible explosions, and such, so I think that those were maybe important in building interest. I don't think that there have really been recent new entrants in movie and TV series that inspired the video games -- Star Wars, Battlestar Galactica, Star Trek, stuff like that had their heyday in the past too.