Transformers being Hasbro's hottest property, it was decided that the brand was popular enough to have it's own full length feature film. Featuring advanced animation, new characters, a more mature story than episodes from the second season along with several big name actors providing the voices for several characters, Hasbro must have thought that nothing could go wrong with the movie. Kids would surely love all the new characters and this would of course keep the toy sales up.
But, as soon as the movie was released in 1986, it was met with negative reviews, with kids running out of the cinema crying, reviewers advising parents not to take their children to see it due to it being too violent, etc. The movie itself can be blamed for the downfall of the Transformers brand towards the late 1980's.
The main problem was that the movie featured the death of several characters, the most important being the death of the Autobot leader, Optimus Prime. Seen as a hero to many kids, Hasbro were not aware that he was so popular and never thought that killing him would be a problem. But, this short-sightedness cost Hasbro dearly as many kids didn't go to see the film, with some cinemas pulling the film from their screens within three weeks.
After the many light-hearted and humorous episodes of the second season, Hasbro was concerned that the cartoon wasn't mature enough to compete with it's rival series Gobots, which apparently featured darker stories and even character deaths, and so decided that the movie must follow this route. Whilst the story of the possible destruction of Cybertron at the hands of a gigantic new enemy was fair enough, it went totally overboard with the character deaths, killing off many Autobots for no reason just to make space for the new characters.
Some fans think that the movie was just trying to be cool but it wasn't, it was just Hasbro managing to mess everything up. After the movie, the story lines for season 3 continued to be more serious affairs, but character deaths were gone and there were still plenty of goofy moments. Even so, there's a band of fans out there who disregard the movie and everything that came after it so their personal canons only include the first two seasons. Problem for me is that I didn't see the movie until the early 1990s, and even then I'd not seen much of any season of Transformers, and I thought the movie was great. Prime's death didn't effect me at all and whilst there's a couple of things I don't like, I still enjoy watching the movie.
And even now - over 20 years later - the movie is still being re-released and both the recent US and UK DVDs have been sell outs, enjoying a much more positive reputation with fans, and also been seen as an ideal starting point for any new fan.