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There's actually a few cases to say that Hogan was showing heel tendencies in WCW right from when he arrived. His matches frequently included him biting his opponents, utilising traditional heel tactics like eye pokes and back rakes, as well as using any number of foreign objects including a steel chair in his feud with Vader, and cabling from a camera to choke out an opponent during one match.
It was during this time in WCW that the crowd reaction for him in certain markets was beginning to flatten out. Hogan, while undoubtedly a massive name from the WWF, wasn't all that familiar to a significant percentage of the audience who didn't or hadn't been watching the WWF. Combine that with certain areas of the country either more clued up or simply burned out on 12 years of Hulkamania and you have the recipe for unrest.
It was his program with The Giant that really bought all of this to the fore. At Fall Brawl 1995 Hogan help his team defeat the Dungeon Of Doom, but after the match The Giant came out and snapped Hogan's neck (Hogan, of course, was absolutely fine and recovered from this happening not once but twice within a matter of weeks). In aiding selling Giant as the monster they wanted to push him as, Hogan very abruptly started coming out dressed entirely in black.
It was undoubtedly a strange look. Couple that with the fact that The Taskmaster had shorn him of his trademark mustache and you created something almost surreal. Hogan started cutting promos in a way that you'd never heard before. The cadence remained, but instead of the "say your prayers and take your vitamins" we were getting monologues about "the dark side of Hulk Hogan".
Worse still was Hogan referencing the OJ Simpson trial: "After all, everyone knows what a man with black gloves and a black rag can do", it was a line delivered with all the subtlety and intricacy that we had come to expect over the years. Hulk Hogan really had just compared himself to a man on trial for murder. Real American, indeed.
Quite what the plan was it's really difficult to say. Plans called for Hogan to be gone from television for a number of months (which ended up half being true, they decided to keep Hogan around to keep up the pressure on the WWF in the ratings battle), so it seems like the initial plan was to test the water with a meaner, darker Hogan, before quickly hooking him from television. If it worked, then great. If it didn't, you could probably get away with bringing him back in the red and yellow.
Once plans changed we started to get these segments with Hogan dressed as the Grim Reaper. This, presumably, was the next logical step – Hogan, now off of television, sent Savage to "bring me the head of Meng" - this was Hogan's way of staying off of live television, Savage too had donned the black gear, ironic, at a time when WCW was quickly becoming less about black and white and more about subtle shades of grey.
Then, as soon as it came, it went. Hogan wrestled Sting on Nitro on November 20th, the match ending in a DQ after Hogan kicked Sting in the bollocks- just kidding, was an interference from The Dungeon Of Doom. The match was also noteworthy for just how much more popular Sting was than Hogan in front of the crowd. Given plans for this match only came about three weeks prior, it's hard to give Hogan any credit for seeing the match coming and pivoting his character to mitigate any negative reaction red and yellow Hogan may get against Sting. Hogan then said on Saturday Night that he realised he shouldn't have doubted Sting at all, and that he knew Savage and Sting had his back.
Then we fast forward to the World War 3 pay per view, and one of the most bizarre segments of the year on about three different levels. Hogan came onto the stage with Sting and Savage for an interview with Mean Gene Okerlund – Hogan at this stage still all dressed in black. Hogan then tore off the black to reveal the red and yellow. It was abrupt, but probably a necessity given that Hogan was now going to be sticking around and the company had no out for his "dark side" character.
Sting grabs Hogan's black vest and chucks it into a bucket in front of them on the stage. The bucket gets lit up with a nice piece of firey pyro for reasons that I don't entirely understand. Then the shirt actually set on fire – causing much of the rest of the promo to be front lit by a hue of dark smoke. At one stage Sting walks across Hogan in full flight, grabbing a bottle of water in a vain and utterly useless attempt to extingiush it. In the end WCW officials do manage to put it out.
More bizarre still was Hogan's tirade on the "Rag sheets". "Observer this" he said, before going onto say that the sheets were a dinosaur compared to the internet. He said the sheets claimed Savage was injured (which he clearly was) but Hogan and later Savage both claimed this to be incorrect.
He then said the rag sheets were predicting a Giant victory in the battle royal - which they weren't. What they were probably referring to was predictions as to who would be the most likely victor in the match – even those were likely soft based on how the match stipulation changed. It's possible this move changed the decision to give Giant the victory. Who won it instead? Savage – who definitely wasn't injured... despite his obvious discomfort, four minute matches and the massive amount of strapping on his arm.
It was a fittingly bizarre end to a bizarre run in Hogan's career. There was no real good reason for doing it, and even if WCW thought "lets try something, he's leaving anyway" - once they decided to keep him around the whole thing became even more jarring. Can we link it in anyway to his turn in 1996? Other than the fact he was wearing black in both instances, I'm not so sure.
Suggested Reading:
Was Hulk Hogan A Success For WCW In 1994?
How Hulk Hogan And Friends Took A Stranglehold On WCW In 1995