They had the theater and own the characters....there is no reason they could not have updated the show in the last 20 years... Much like Innoventions in EPCOT, they had to tear a building down because they could not think of a replacement....which is really sad. What was once the most creative and innovative entertainment company in the world cannot or will not update and refresh their attractions.
For a show like TtbaB I am not sure what updating looks like.
The show itself, the characters, the message, and the effects have not seemed to have aged badly, in the physical plant sense. I don't ever remember going into the theater and the 3D not working, or the water spray/smell, ect. All the physical aspects of the theater always seemed to work.
There does come a point when the IP itself becomes stale. Unless sequels or tv show tie ins come out, people just stop having a connection with the characters. I don't see Bugs Life having the same legacy factor as Lion King, or Little Mermaid, ect. That could be some subjective bias as I and my family have enjoyed those movies more, but I don't think I am far off.
So when it comes to a show like this, I think at some point you are not talking about an update, but a complete shift in the show from one IP to another. You can argue maybe the shift should/could have happened earlier, but I think you're always going to be talking about a complete transition.
The other thing that makes the transition hard is the location of the show. It's not like this is just a theater building that you can re-skin to fit whatever show is going on inside. With it being within the Tree of Life getting the dynamics of a show that fits that venue is going to be a challenge also. Still I think Zootopia isn't a bad attempt at it.