I've said this many times. PI was killed by two things.
1) The opening of West Side.
and
2) Never revitalizing the clubs.
The first led to Pleasure Island being a divide between Marketplace and West Side, which meant that people weren't going to West Side. So the decision was made to open up Pleasure Island to everyone. THIS led to drunks wandering amongst families, which led to the occasional problems.
The second one is the phenomenon of bars/clubs - they just don't have life cycle of restaurants. New clubs get hot for a while, but once they get old, people lose interest. That's why many clubs and bars don't last more than 10 years. While certain clubs could have stayed open for a long time like Adventirers Club, Club's like Manequin's and Rock and Roll Beach Club became too same,same.
So, the result was business dropped off because the clubs got stale, and Disney didn't care for the way it broke up DTD, the combination was the death knell. (And the idea that they could outsource most of DTD didn't hurt them either.)