The bowl system was established primarily as a tourism draw for local communities.
Average in-person attendance at the non-CFP games was down 9% last year.
TV ratings were up as a whole, the best since 2015-2016.
There is clearly interest in college football games during the holiday season, but there are new hurdles to that. Players opting out, teams opting out. Not enough teams qualifying for games, resulting in some ugly matchups, dropping attendance, and less money flowing into minor bowl games from a sponsorship level (e.g., the LA Bowl had 3 different sponsors in 5 years.
The concept of bowl season is changing. There is an interest in watching games, but will cities and sponsors continue to spend to bring a game to their city that doesn't draw buts in seats, but draws TV revenue (to your point, these are the challenges on a local community being involved in the bowl process)?
I'm guessing ESPN will desperately look to find a way to balance the number of games to ensure the product is good, has enough representation, and can happen in a different way (maybe home games for the better team vs. a bowl destination), which would keep total costs down for the schools and ad revenues and rights fees could be shifted to pay the teams for thier travel and still drive more revenue for ESPN (as one random thought).
All this to say, I'm in the camp that the Bowls as we know them will contract significantly, but that most likely won't necessarily mean a similar decrease in end-of-season games around the holidays. There's too much money to be made, and one thing that is true of college sports right now is that if there is $ to be made, it will be considered and pursued if there are enough zeros involved.