I am surprised nobody mentioned MAHA5 but i guess they also are responsible for the dominance that Holo ID has in the country due to their incompetence so they are pretty easy to forget
MAHA5 is mostly keeping to themselves, since they got a fairly decent things to do and their agency is at least stable for the time being even with the loss of Zen Gunawan. Considering that they did reveal a new gen during ID's biggest weeb market event Comifuro/Comic Frontier 17 a week ago, they are just fine with themselves, incompetence aside.
Also it's not like they're easily forgettable, MAHA5 and arguably other ID agencies with the exception of Hololive ID (and the still remaining NijiID) are really just... keeping themselves in the ID internet scene and doesn't really expand out. And even then, those that expands like MAHA5 who have a JP branch only did so one step at the time, slowly.
All because the branch stagnated. Maybe it could have been different if Hana realized that "the rising tide raises all ships" instead of "I'll wait for them"
Hana might be at fault here, but let's be frank, even ANYCOLOR themselves doesn't really do much in helping out with Niji ID's growth and instead fucked around trying to see if they can get superpower 2020 country (India) to be EN or something/
I think you're partially right - merging the branches let them dodge the initial PR hit they would have got from letting everyone go. But what happened after that was a steady stream of ID talents quitting over months and months (which definitely gave a bunch of people the impression that Niji had turned into a sinking ship). That probably hurt them PR-wise even worse in the long run than simply saying "sorry, this branch isn't working out business-wise and we need to leave the market".
Seems like death by a thousand cuts as far as their reputation goes. On the other hand ex-KR has been doing pretty well after assimilating into the main branch - for a generous interpretation maybe they just miscalculated the capability (or willingness) of ID to do the same. I'm far from an expert but I was under the impression that the KR talents have always been closer with JP, while ID mostly did their own thing. And honestly it must suck knowing that you're never going to get new kouhai.
KR branch enjoying the merge is mostly because the staff pre-merge is a lot more incompetent than ID, and the merge is seen more as a "JP Intervention" to make sure the branch doesn't implode before merge. Also if you consider that most KR talents can at least speak japanese well, it's pretty much very helpful for interacting with their JP senpai post merge.
Meanwhile, ID talents doesn't exactly have much that actually good/fluent at japanese and can only interact in either Indonesian or English. It doesn't really help them with their senpai (and frankly one of the reason why Hana might've a fault in this, because she's just too selfish to act as translator between the two). By the time that we got ID that can at least fluent in JP along with JP that fluent in EN (Oliver Evans) or NijiEN that can speak JP and interact with ID and JP at the same time, it's already merged and ID's on their long-term death row.
And yes, Merging ID with JP doesn't really look "bad" to most people, but considering that they practically can't do anything and even lost a potential new kohais by cancelling ID wave 7 debut, they basically just fucked the branch big time. I consider this (and I guess some ID fans in here) as one of Riku's notable blunder and he just gave Hololive the ID market on a silver platter.