That weeded out a lot of players because those that lost would be sticking quarters into a machine and losing, and eventually realizing they are paying just to get steamrolled.
But for those that won, the important thing to remember is that they do not earn anything back either, they put money in with the full knowledge that they will not earn it back.
Even with tournaments, you must take into account that you (or they) would need to assume the player has a realistic chance at placing top three to earn anything. If they do not have a chance at top three then they're really just paying for the entry fee, and playing for no other reason than themselves. Thus, it's easy to say most players are not competing to earn money.
The reason to keep doing it is because of competition and growth. It's a hobby, and an addictive one. Since the beginning of competitive fighting games it's always been about learning to counter the opponent. If you fight a player abusing [x] tactic it becomes a fun and interesting challenge to learn to beat it. What is the [y] the player needs to do in order to counter the opponent's [x] tactic. When you see it in videos it might not be entertaining, but so what -- those players aren't there to entertain you, they are there to entertain themselves. What that "cheap tactic" is doing is helping the community by forcing everyone to level up and fight harder. It's all about setting a bar and having your opponent beat it, or finding some one else who raised the bar even higher so that you could try and beat it.
One might think it's an asshole move to pick top tiers or run the clock for wins, but nothing says "step up your game" better than a loss, because that was your quarter that just went down the drain. It gets the point across, because next time you don't want to lose. If you don't like watching it then don't watch it, if you don't like fighting it then don't fight it, you're only forced to do so if you actually want to win a tournament; in which case you must deal with it in order to face the reality of competition. That's just how it is. A "cheap" tactic is an invitation to counter it, it's an invitation for competition.
These days, in the era of console gaming, online play, and boundless recorded match videos at everyone's fingertips it's easy to get disillusioned. You may not feel like playing a particular game or against a particular person just because something rubs you the wrong way and you think it's "cheap". It is truly a convenient privilege to be able to pick and choose from dozens of opponents at a whim any time of the day, where as without online you'd be stuck with only a handful of players that live in your immediate area and only at specific times when you and they are available.
A lot of tactics that average players would have gotten destroyed by if they never encountered it before are in videos now for all to see. A lot of combos they never would have figured out on your own are recorded both in TACVs and match videos. But it is not just there to entertain you, it is also there to educate you. Information flows in large quantities very quickly, so the game evolves extremely fast. It raises the bar that much higher, that much faster. A lot of those would-be players that, back in the day, lost too many quarters and quit before they began can now see where they went wrong. A lot of players that couldn't figure it out on their own now have a helping hand. A big one.
So let's face reality: tournaments for fighting games, even today, do not rely on spectators because there are none. The spectators are the players. Tournament prizes consist pretty much entirely from entry fees from the tournament. We support our own community, the players themselves, no one else. The videos that people put out aren't there for entertainment, the players are playing for themselves and sharing it with the world to bring others in. Casual online play is there to branch out and bring more players in. Games with easy execution and simple game mechanics and simple combos are there to bring more players in. It might all be seen as spoonfeeding and a disconnection from the days when we were shoulder to shoulder and shoving quarters into a machine, but it's all there to help, not hurt.
No one is forcing anyone, and no one is playing for the sake of anyone else. It's all for the love of the game(s) and ourselves.