Well... again, technically they do make a lot of films that seem to last from February vacation to about Spring Break... basically to match regional school vacations. Disney did that for a while, and put stuff like Recess, Doug, and some of their theatrical "Cheapquals" it seemed to be mildly successful for them... plus, I'm seeing a lot more Late March/ Early April films... TMNT came out in March, as did Meet the Robinsons, and they did pretty good. Ice Age 1 and 2 came out that time too...
Muppets From Space disappeared very quickly. I think it was largely considered a mess by those in charge and they wanted to dump it on home video ASAP were it could more easily cash in. It couldn't even recoup its budget worldwide - a first for a Muppet picture. So that's what I think happened. It made a pit stop in the theaters, but was anticipated to fail. MFS really plays better for home viewing.
Whenever Disney places this new movie we can rest assured that they want it to do well in the theaters as well as home video.
A perfect summation... There were a LOT of movies around that year that were made basically to do well enough for themselves on a smaller level that year. Remember, Star Wars ep 1 was the big movie of that year. Stuff like Inspector Gadget and Dudley Do-Right seemed to be made so they could have a couple family diversions during that summer season... MFS was clearly one of them. And anyway, most Muppet movies do a lot better on video anyway. I wouldn't be surprised if Elmo in Grouchland was basically theatrically released just to advertise that it would be on video soon (mainly cuz Elmo's core fan base was way too young to take to a movie theater, and it just plays better on video anyway, except for that horrible pan and scan job they did on it).
But if there's one thing I want to see its a movie production value. That's what I loved about most of LTS... even though it seemed a little vacant at times, it felt like a movie and not a TV special... VMX was sort of movie like, but still felt like a telefilm... Oz looked directly like a telefilm (and I'd gather KSY did too, I STILL didn't see it).