I don’t think fans of a particular style like this would consider it a fad. I mean a fad is something that pops up then dies out and goes away. I like to think of stuff like this as a renewed interest in something that was definitely more than a fad to begin with. Much like all “retro” games which I myself have an interest in. People enjoy pulling out an emulator to play old things right? So naturally people also want to make new things in the old style. This isn’t unique to fps at all. This is more of an expansion of a renewed interest in the old style of games and the old limitations of games. It is just now starting to really incorporate fps into what is really a bigger thing.
Remember all those indie pixel art games that started to become popular and everyone said “oh it’s just a fad” more and more of those are coming out all the time and now you are starting to see fps genre included in this “fad” that hasn’t turned out to be a fad at all. And sure I wondered how long it would last myself when it started to really pickup and gain traction. But here we are.
Anyways I think a fad dies out almost completely if not completely. There usually isn’t a left over niche crowd still following a fad long after it loses it’s popularity. Maybe for a short time prolonging the death a bit but if there is still a small but diehard following at all then it really doesn’t fit in under the fad moniker. With something like this you will almost always have that small group of people who continue to enjoy it regardless of waning popularity. Is that enough to keep this thing profitable? Hard to say really.