That could explain why viewership has very steadily declined over the decades, but it was still pretty strong in 2014 and then rapidly declined.
Hollywood couldn't have lost that much glamour overnight. The Best Picture winners did seem to change, though. In 2014, the last strong year, the winner was 12 Years a Slave, a pretty popular and somewhat mainstream movie. The next three winners, from 2015-17, were Birdman, Spotlight and Moonlight, all movies that probably mostly cinephiles went to see and had any interest in. I suspect that a lot of people lost interest because the movies getting the most buzz were ones that few of them had seen.
Also, all of the controversy and bad publicity surrounding the Oscars in the last 7 years (ex. #OscarsSoWhite, removing categories, rescinding nominations, announcing the wrong winner) has likely hurt its image. In fact, the #OscarsSoWhite hashtag and the resulting boycott were for the 2015 awards, which aligns. It looks like that and Birdman might've started the decline and then more controversies and non-mainstream films kept it going.