Including one of its two cofounders. They agreed they they would use puppets but never CGI, and they said that they would remain pure to the storyline rather than "sell out" for the sake of profits.
But then season 1 was a success and one but not the other cofounder wanted moar monay, so as soon as the second season it had already begun to lose everything that it spent that first season building up.
The magic was gone, not entirely, but mostly, having been sacrificed for the sake of chasing profits "above all else".