It was a failure of style, gameplay and quality.
Style because they fucked it up following the technology too much -- although no-one can blame them, as it's taken a good long while for developers to realise that the overall visual impression is a thing in itself and not necessarily linked to technology, and at that time the technology was what everyone was chasing. The limitations a 2d engine presented were certainly less harmful to Blood's excessive style than the limitations of a 3d engine in the Blood 2 era though. Blurry textures, low poly models and shitty particle effects. Polygonal explosions too, YECH. I'd hoped that Quake 2 would be the example that put everyone else off doing explosions this way forever.
Gameplay primarily because of the lacklustre weapons, pathetic explosions, high proportion of dull levels and rubbish enemies. The horrible physics of that generation of the Lithtech engine didn't help either. Gone was the bounciness and fluidity of the Build engine movement, in was this horrible sudden stop deceleration and abjectly unfun gravity acceleration of that generation of the Lithtech engine. No One Lives Forever got away with the horror of movement physics on then present-day Lithtech, mainly because it was a much slower game, but the fast paced combat of Blood 2 put the engine's weakest cards on the centre of the table at all times.
Quality. Well, I dunno, I just remember there being tons of annoying little bugs and lots of enemies getting stuck. I mean, enemies in any of the old shooters are stupid, but the one thing they've got going for them that is zero pathfinding or not, they at least keep MOVING. Blood goes one further than this, I've noticed, where the AI seem to change direction if their current push is giving them no joy. Blood 2, on the other hand, was stuck demon city.
Not good then, and even worse when it was my most anticipated game at that point.