I don't think there is any one reason that the movie failed.
I believe that Venom did, in part, contribute to their failure. This does not mean Venom is a bad villain - in fact, he's one of my favorites - but he was certainly rushed, and the symbiote even moreso. I actually did like Venom in the movie, and thought Eddie Brock was truly sinister and an appealing villain. I don't even mind that much that he was put off 'til the end - considering that Venom needs such a big build-up, there's no other way to do it.
Except, of course, spanning the idea over multiple films.
The symbiote got an even bigger shaft than Venom. Rather than taking the time to develop, it just flew down on a meteor and coincidentally landed right next to Peter Parker, and when he put on the symbiote, he turned into a punk '50s motorcycle gang member minus the motorcycle, also known as emo Peter. Yeah, the symbiote definitely needed more time to develop and show how it really twists Peter into an aggressive, vengeance-seeking, darker version of himself. Only the part where he "killed" Sandman gave off that impression at all. (And yet, it was when he "hurt MJ" that he realized he had changed - okay, that's a fault with writing.)
So whose to blame for this? The fans? Avi Arad?
But that wasn't the only problem. I think that the next problem with the movie was the inclusion of Sandman. Even worse, the idea of Sandman killing Uncle Ben. The retconning of Spider-Man's origin was not something I enjoyed - in fact, it takes a large dimension out of the character, and really creates a mess. And what's worse, by doing this, we lost even more time! Sandman didn't even have anything to do with Venom or Harry, so it became impossible to link the stories together.
So whose to blame here? Sam Raimi?
Now, one could say that this one movie should've been several. I'd agree with this, for the most part, though I certainly do not believe that the Sandman plot should have ever been. Yet MadGoblin (spideykicksbutt.com) claims that the movie's biggest problem was not in the planning, but the editing. And he does have a point - it would've been much more powerful to see Venom threaten Venom's daughter (I believe this was in the original), or to see the scene where Sandman's family returns to the final battle, explaining why he disappeared for the latter end of his fight and giving a resolution to his storyline. But of course, the editors did have to cut something.
So what do we blame? The editing? Or the planning?
And those weren't the only problems either. One could certainly argue that Aunt May's haggish hairdo detracted from the power of her speeches and cost her ethos. We could point to Tobey Maguire's crying, which wasn't quite above par. Many have complained that Kirsten Dunst has lost her touch.
Where lies the blame? The costumers? Tobey Maguire? Kirsten Dunst?
There is no single problem with the movie, but many problems on many levels, and fixing just one of them or replacing just one person would not have turned into an Academy Award winner. However, it is now time to move on. Those involved should learn from the mistakes they made, and be careful not to repeat them. Replacing the whole cast and crew won't make for a better Spidey movie - rather, learning from the past as a whole, and moving on to evolve as a franchise will.