Both this movie and The Santa Clause were released during the 1994 holiday season and both involve storylines surrounding people thinking a man is crazy for believing he is the real Santa Claus. Did the success of the Santa Clause cause audiences not to like this movie as much since it is similar film and was released at the same time?
You do know Miracle on 34th Street is a remake of an older film, right? Most people prefer the original 1947 movie. It has nothing to do with the Santa Clause. Honestly, I myself prefer the original one.
No. In The Santa Clause, friends and family of Scott do believe he's crazy for thinking he's Santa (or looking like Santa), but in fact, Scott was established as Santa early in the movie. We as the audience knew he was the new Santa. In Miracle, it was never established until the end that Kris was real, and even then, it was only a suggestion based on circumstance.
"Did the success of the Santa Clause cause audiences not to like this movie as much since it is similar film and was released at the same time?"
I don't see any relationship at all, unless one wants to suggest that there are only so many Christmas movies moviegoers are willing to see in any given season. To me, this movie didn't do well because it's simply not a very good film, and nowhere near as good as the 1947 version. A remake should either be better than the original, or at least having a unique take on the same story that would make it interesting. This film does neither.
I suspect that IS what is being suggested, that many moviegoers only have so much time, money and interest give to Christmas films, and so if two films are released to theaters with a similar premise then many people will choose one or the other rather than going to see both. And there probably is something to that.
In regard to whether it is a good film or not, I just rewatched it last night after having not seen it for several years. I did enjoy it and think that it's overall pretty good, and that it DOES do some different things that are interesting. While I love the 1947 original, I also think that this take on the story is worthwhile and that the film justifies its existence.