The problem is simple.
People who get into a negative loop will stop playing arena since its pointless. Young servers are never reaching kage, hell even anbu might be a problem for them since they cant compete on initiative. Older servers are depopulating so there are less and less players on the arena.
Result, at kage or super kage you face only double digit servers, which limit the number of players participating in ranked which slowly will get less and less players.
Even if you get ucky and win once, you will loose 5 other times and in the end get stuck in a negative loop.
Conclusion, No one under server 200 goes ranked after hitting kage since its pointless, waiting time becomes longer and longer and the arena becomes a useless gimmick.
You say build your refines, purify. I am a casual spender and have 7k initiative. Im in the servers on the 400 and now at Jonin ranl ive been figting server 86, 92, 74 (I ask since when the opponent makes the fist move its usually over, and the community is fun to talk to). And I am a casual spender. Imagine a f2p.
If you remove negative points before you hit 6 paths for the first time at least you can try and get lucky from time to time in order to reach that stage and try and compete for something.
We are NOT complaining about the initiative system, nor the pairings or anything else besides the negative points for 1st timers. Stop saying do this and do that when it obviously does not apply to over 90% of the players.