At a high level, that. And of course that requires a certain ratio of predator vs prey. And there were way too many would be predators.
Both groups self-identify as wanting a "real" experience in a sandbox that lets them "do anything". However one means this allows them to slaughter people with impunity whereas the other means it enables them to explore the world, choose their own occupation, define their own goals, etc. It's not even a PVP vs PVE divide, as there are plenty of PVPers in the 2nd group. Instead it's closer to "Griefers" vs "Sandbox game enthusiasts", where the griefer crowed requires prey to feed their urges.
So what happens is the griefer oriented crowd chases away the other crowd, then has no one to grief and then they leave too. You'll see it in comments here as many posters were, shall we say, not super mature 25+ years ago :) they'll be pining for the days about how they could kill everyone, steal their stuff, loot their houses, and otherwise cause problems.
One of the issues with the game was that while those behaviors were intentionally allowed, the designers didn't account for the kind of player who *only* wanted to do that and generally were obnoxious about it to boot instead of trying to massage it into the lore/RP of the game. So the scale was all off.