Schumacher won seven world titles in his first career, but returned in 2010 with Mercedes and managed just one podium finish in three years.
"People new to the sport - people who have joined the F1 fan fraternity just recently - will remember Michael now, not as he was," said Ecclestone.
"They don't see the hero that he was but the human that can fail."
Ecclestone added: "I would rather he had stopped as a seven-time world champion, rather than stopping now."
Schumacher first retired from the sport in 2006 after losing an intense, season-long battle with Fernando Alonso for the title.
The German returned in 2010, aged 41, linking up with Ross Brawn - who he worked with at Benetton and Ferrari - at the new Mercedes team.
However, he finished behind team-mate Nico Rosberg in the drivers' championship in each of the three seasons with the German team.
Despite Schumacher's disappointing comeback, Ecclestone said his departure will be a loss to the sport.
"He enjoyed racing and was there helping to do good things for Formula 1," said Ecclestone when speaking to the sport's official website Formula1.com.
"We will miss Michael, because even though he wasn't winning races in those three years, he is still very popular."
Schumacher's countryman Sebastian Vettel won his third world championship in Brazil, but Ecclestone said that while the young German is today's "yardstick", he is unsure whether Vettel can go on to break Schumacher's record title haul.
"A seven-time world champion - that's not easy. He is not half way there.
"Times are simply different today and that doesn't only go for drivers. The whole environment is different.
"It will be a question of how good his team will stay - or how bad the others are.
"When Michael won his five titles with Ferrari it was because Ferrari did a better job than any other team - that is the same with Red Bull at the moment. Whether they can continue, you don't know."