For those who don't know, Tumblr was removed from the app store because cp was found on it.
They could've got rid of the cp and hired moderators, but banning porn itself and using laughably bad detection programs will turn it into livejournal 2.0. The execs don't want to hire the moderators necessary to keep the platform safe from abuse while still competitive.
Given a choice between hiring so many people that they certainly lose money or taking an unpopular decision and risk losing money, there's only one choice for them. For better or worse, Rule 34 rules the internet.
If Tumblr is like 80-90% porn or otherwise nsfw the platform is dead. Something new will arise for those cast out, but what is left will be virtually nothing. Even people that aren’t under attack from the new nsfw ban view this as an attack on free speech and may jump shop as well. And if that’s the way the membership is treated, it should die.