Why exactly did The Ultimate Warrior's run as champion tank? The guy was immensely over, and the title win at WrestleMania VI was seen as a passing of the torch from Hogan. Putting the title on the Warrior was seen as the best thing to do at the time. Around this time, NBC also saw the ratings for Saturday Night's Main Event decline. So everyone applauds Warrior winning the title, but then go "Meh"? Was it a lack of any threats to the title? Hogan was feuding with Earthquake, who was probably the biggest threat at the time. I don't recall Earthquake ever truly threatening the Warrior's reign.
What happened there?
Lots of stuff.
1) No viable challengers. Warrior wins the belt and then immediately gets put into a feud with midcarders like Dino Bravo and then the repackaged Rick Rude, who we had just seen unsuccessfully face Warrior at Summerslam.
2) People still liked Hogan and wanted him on top. It would be one thing if Hulk lost and then went away for a long while, but he basically stuck around the whole time and was clearly the bigger star. Warrior just couldn't compete with it.
3) Warrior wasn't connecting with the fans. This is one that often gets overshadowed, but it's important to note that his crazy promos were fine for an IC level guy, but when they put him on top he pretty much failed to make anyone get invested in his matches on a human level. Hulk was a blowhard but at least he would interact with Mean Gene as a real human being and do talk shows and stuff. Warrior was strictly all gimmick, all the time, and once people had seen that act and seen the logical conclusion of the storyline, there was nowhere left for the character to go. That being said, they finally figured it out with the Macho Man storyline in 91 where he started showing real emotions, but by then it was too little, too late.
4) Merchandise. Remember all the great and memorable Warrior shirts and merch you could buy? Yeah, me neither.
One of them would have been bad, but taken all together the poor bastard never had a chance.