Ahhh, KK vs. G was a fluke! The 'King Kong' name being put on a movie was cashing in on a fight that everyone wanted to see that hadn't been done before. Those early movies weren't burdened by a history declining quality (as the series progressed and, ergo, could be blacklisted by fans and casual movie-goers before they EVER came out) and heck, though it wasn't stop motion it wasn't really considered B-movie effects by that time either. I think if it were anything, it was a success built on hype when these giant monster movies were still fresh and hadn't conceptually fleshed itself out yet (and consistently/traditionally limited by the $$ they could put into the effects dept).
People KNOW what to expect with Ultraman. The reason Godzilla was on the ropes was because the 'formula' ideas went dry and done to death and because the old men running Toho couldn't stretch their yen on the gamble of new and/or unique ideas, much less better FX.
I do think the Japanese audiences were a bit sick of the same old effects after awhile and maybe any version of Godzilla altogether. Especially when you consider the popularity of U.S. special effects movies over there and because Kaiju movies had been better rendered with 'Gammera 3' and 'The Next' among others. Yet, if the effects were up to par and past the b-level stage, I'm thinking that they could have STILL cashed in on formulaic crud stories (S.O.S) and perhaps way more-so with fresh ideas or (yes, I'm about to say it) a nod to the
darker roots. Finally, this would only most likely work best with some space between every movie instead of one-per-year.
There. All done.