For every Mario, there is a Plok. For every Sonic, there is a Radical Rex.
I'm going with just a general definition of "failed" here, it doesn't mean a game did or didn't reach a particular sales figure, just that the character was obviously meant to latch on to a particular trend and never really caught on. Also by "mascot character" I mean anything created to be iconic of it's particular development or publishing company. (Not so much Polygon Man.) Some characters, such as Megaman, have become indelible parts of our gaming culture. Many others have faded away, lost to popular culture, though maybe even after a sequel or two...
So who is your favorite failed mascot?