Murphy did begin to decline in the early 90's. But he's a comedic actor, and usually those types of actors don't last too long anyway. Their material gets old, and people just get tired of seeing them.
But you have to give Murphy credit for realizing that his act was old news in Hollywood around this time, and he sure did reinvent himself. The first Nutty Professor was a really good movie, and Murphy further focused his attention on younger/newer audiences as Donkey.
Just as many kids and teenagers know who Eddie Murphy is from being Donkey, and his kiddie stuff, as us grown adults, who watched him from the time he was on SNL through the 80's.
Not a lot of actors can realize when it's time to make a change, or can even make that change, but he did it.
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