I think that's the Number 1 reason why it had such a steep drop off. The year's worth of trailers and posters promised a big budget US 1990s Independence Day-style film with Godzilla, no more, no less, and that's what we got EXCEPT Godzilla didn't look like Godzilla. On top of that the Godzilla that doesn't look like Godzilla was eventually replaced by little baby Zillas that also don't look like Godzilla (or even Godzooky). Yes there were many other flaws, but that they were the kind of flaws that were similar to those of other big blockbusters of the time that did well (including Independence Day).
Although perhaps worth noting it wasn't strictly speaking a bomb, it just underperformed. They were still planning a sequel for a while, drafts were written in the year or so following the film's release.
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