A lot of it is about running a quick, expeditious, tournament that people will want to go out to frequently and keep people in contact more than every month.
The other part of it is that knowing matchups and adapting quickly is a huge strength that good players have. Some players may not adapt that even from years of play unless they get a whiplash of going to a single elim, single match, tournament. and losing to Hare and being out of the tournament they waited all month to goto and losing within 30 seconds.
Yeah.. I'm calling bullshit and Japan fanboyism on this one.
It's the environment. People can't get better if they can't train. They can only train where there are players. This isn't like you can just go to an arcade every day and get exposed to a hundred different players with a hundred different playstyles in America. It doesn't happen; it
can't happen.
There are motivated people, who have the talent and ability to adapt, who just can't get the environment needed to see not just what they can do but their opponents can do. It leads to the dominating players focusing more on grinding the techniques of the game rather than their mental game. Setting it to a single elimination format would only exacerbate this problem. Which is a lot of what people complain about when they look at 'anime games.' Set play puts less focus on technique wars and more on the mental game, as there is more time to train your opponent rather than simply recognizing his style and running counter to it.
You need to adapt either way, if you can't you'll lose no matter what, but nobody would go out to events if they knew they were just going to get reamed without a second chance, because the environment does not support them being able to train up their overall game experience for them to invest so much in so little.