This might actually be a materials issue, outside of very few working artists still being trained on it. Animation cels aren’t used in the industry anymore, so it’s become a high priced specialty art item. $1/frame when animation is usually done with 8-12 frames per second adds up fast. That number is a guesstimate based on the bulk supplies I can find online, but even half that price would still be huge just for materials.

Right? Water colors no longer exist? Please.

Could the show make the kind of money it used to? The first seven seasons averaged over 8 million viewers an episode on broadcast television. The first episode of the new Hulu season only earned 4.4 million.

I don't know if the economics will ever come back for hand animated television.

Also:

Patterson bluntly admitted to his host that said change was an unfortunate side-effect of the industry’s move towards cost-cutting and digitization.

So it's possible, they would just make less money if they remained faithful to the show they're fucking rebooting.

No, it's similar to how film is expensive now; the demand for the product decreased to near non-existence so the few people who still make it have to demand a high cost to be able to keep making it.

They're still paying artists (presumably unionized too, from what I know of the industry, which isn't much). They're just not paying the cost it would take to get the ancient technology back into manufacturing, and train new artists to use the tech that no one is trained to use anymore. (It's more than just watercolor. I'm sure the paint is special, as well as the material it's painted on, and the tools that help them use it all.)