Based on some of Sajam's comments, it sounds like the requirement for the players to actually be on stage is probably imposed by Twitchcon.
He's mentioned previously that Capcom and Twitch are partners/sponsors of this one, and in this clip he says he hadn't been planning to do one this close to the previous one, but he moved it forward because Capcom and Twitch wanted to work with him to put the finals on stage at Twitchcon.
He also said they asked if they could have the vtubers play remotely, but it was denied.