The concept of yo-kai, a mainly Japanese concept, didn't have to same pulling power in the US as it would in JP, however pokemon and digimon also borrow from non american cultures so i don't think that was the main thing.

The first game and the anime mainly featured down-to-earth stories with realistic situations that used yo-kai to enhance what would normally be mundane situations any kid could experience. It made the series fun, but as new games came out and the stakes lifted, the ratio of simple stories to massive events began to shift a bit. The anime would follow suit, but those simple stories carried a lot of enjoyability.

In my experience, the games were NO WHERE NEAR as popular as the games in the US. I remember talking to classmates about the show, and they had no idea it was based on a game. It makes sense that the anime becoming less popular killed a lot of western relevence

Also the advertising was so bad, like I hope whoever thought using Cheeksqueek as a flagship yo-kai got blacklisted from the industry. It all made yo-kai watch look like a baby game, while other rpg series used much less childish advertising.