A Nightmare on Elm Street 2: Freddy's Revenge almost killed the series by recasting Freddy at a crucial moment in the franchise's history. According to 2010 documentary Never Sleep Again, Freddy was briefly recast with an extra in the series' first sequel. This recasting came about as the result of a dispute over money between Freddy performer Robert Englund's agent and New Line Cinema, the production company responsible for introducing the iconic slasher to the world.
Prior to production on A Nightmare on Elm Street 2, Englund felt entitled to more compensation because of his pivotal contribution to bringing Freddy to life. New Line head Robert Shaye disagreed and Jacques Haitki - cinematographer of the first two A Nightmare On Elm Street movies - explained in Never Sleep Again that in the midst of these salary disputes, Shaye wondered why they even needed Englund at all.
The New Line head felt Freddy was ultimately just a guy in a rubber mask and could be played by anyone, so A Nightmare On Elm Street 2 director Jack Sholder was forced to work with an extra as Freddy. After shooting some scenes with this new Freddy Krueger - who was impossibly stiff and walked like a "dimestore monster" - it was clear Freddy was not just a guy in a mask and Englund's portrayal was essential to the character.
Robert Englund's portrayal is a major part of what made A Nightmare On Elm Street's slasher so beloved. Everything from his body language to his ability to make Freddy hilarious or terrifying was an essential ingredient, but New Line hadn't yet grasped this fact. After working with this unnamed extra, Sholder reported back to Shaye that recasting Freddy with anyone but Englund would be a foolish move and a deal with the actor was quickly reached.
Following the sequel, Robert Englund went on to portray Freddy in a further five sequels, a TV series and a crossover in Freddy vs. Jason. The actor has since retired from the role, with Jackie Earle Haley inheriting the part for 2010 remake A Nightmare On Elm Street. Despite Haley being an Academy Award-nominated actor and giving a menacing turn, for many viewers it was hard to separate the character from Robert Englund's singular performance. This might be one reason no sequels to the 2010 reboot followed. Had New Line committed to Freddy's recasting in A Nightmare On Elm Street 2: Freddy's Revenge, it's entirely possible the series would have never moved beyond a second entry, and in hindsight, it's amazing to think the producers hadn't realized this yet.