Yeah, pretty much this. I mean, back in the olden days one of the best mods for Doom was Batman Doom, which replaced the Doom enemies with the characters from the comic series and what not. It'd be a legal nightmare to try monetising something like that. Same with the various Lord of the Rings inspired mods for open world games, Zelda Total War, the various mods for GTA that adds characters and vehicles from other franchises...

Try and monetise mods, and you pretty much kill this part of the hobby all together.