Puppets are very ancient entertainers," Orson Welles once said. "They don't just go back to the crib - they go back to the cave." He made this pronouncement on the only episode of his abandoned 1979 talk show, while the great filmmaker's guests looked on with fixed grins, like anxious kidnappees. Those guests were Jim Henson, the Muppets' creator, and Frank Oz, his trustiest fellow performer, whose pioneering work on Sesame Street, The Muppet Show and then a Muppet Movie, scheduled for release that summer, had brought puppetry into the cultural spotlight.

"You dragged that squeaking box of dolls into the 20th century," was how Welles put it to them, in a tone that suggested the pair had prised the lid off some forbidden casket. Yet the Muppets never had much truck with puppetry's creepier overtones: no matter how crazed things got on stage or behind it, the characters' essential decency and warmth were never in doubt. Of course, this was back when a half-hour variety show presented by a baize frog qualified as weekend primetime. But 18 years into our unnerving new millennium, whither the squeaking box of dolls?

A new film, The Happytime Murders, has an answer. Directed by Brian Henson, the late Jim's eldest son, this film-noir-themed raunchy comedy, with an all-new cast of characters from outside the Muppets canon, seems to want to do for Kermit and the gang what Who Framed Roger Rabbit did for the Looney Tunes. Set in a world in which humans and puppets coexist, and partly prompted by the Henson Company's recent improvised "adults only" stage show called Puppet Up!, it centres on the hunt for a serial killer preying on the cast of an Eighties puppet variety act. It features drug abuse, spilt and sprayed bodily fluids, and a tag-line - "No Sesame. All Street" - that led to a lawsuit from Sesame Workshop.

• You can check out the trailer here, but fair warning: It includes explicit language and offensive material.

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As Welles sonorously observed, puppetry has been around for as long as performance - it was found in ancient Greece and Egypt - and traditional forms, from wayang to bunraku, can be as rarefied as mime or dance. (Even Punch and Judy, the British seaside favourite, grew out of commedia dell'arte.) But in the West, thanks in no small part to the success of Sesame Street, the perception of puppets as kids' stuff is powerfully entrenched. That's why the explicit sex and scatological humour in Team America: World Police, the stage musical Avenue Q and the Sesame Street-spoofing Kneehigh Park felt so uproariously wrong.

Yet Jim Henson flirted with the dark side of puppetry, too. A genuine visionary, he was loath to be pigeonholed as a children's entertainer, and kept testing the boundaries of acceptable Muppet conduct. At first, these transgressions were tucked behind the scenes. When the signature Muppet number Mahna Mahna debuted on Sesame Street in 1969, few were aware Henson had found the song in an Italian soft-core porn film called Sweden: Heaven and Hell. And as audiences chuckled at Miss Piggy's highly strung antics, none knew of the bleak pen portrait Oz had written while developing her character, which described her "sad, difficult, painful" childhood: her father's death, her mother's abuse, her search for validation as a piglet on the beauty pageant circuit.

A collection of puppets, including the original Kermit the Frog, at the Smithsonian's National Museum of American History in Washington, DC. Photo / Getty Images
A collection of puppets, including the original Kermit the Frog, at the Smithsonian's National Museum of American History in Washington, DC. Photo / Getty Images

In the early Seventies, once Sesame Street had become an established hit with preschoolers, Henson and company tried to bring his fuzzy creations more overtly to a grown-up crowd. The result was The Land of Gorch, an X-rated skit about a royal dynasty of grotesque fantasy creatures, which ran as a regular feature on the first season of the late-night sketch show Saturday Night Live.

Yet as soon as the first episode aired, it was clear The Land of Gorch didn't work. The puppets themselves weren't the problem - in fact Henson would memorably revive their wizened, gothic look for two films, The Dark Crystal and Labyrinth, in the Eighties. But the Gorch skits, written by the SNL team, had a baggy, comedy-club rhythm that didn't synch up with the more energised, music-hall performance style Henson had developed. The odd fantasy setting was hard to write for - so much so that working on the slot became a weekly booby prize. Head writer Michael O'Donoghue once signalled his disapproval by knotting the cord of a Venetian blind around the neck of a cuddly Big Bird, hissing, "I won't write for felt." Nor were the show's human stars enamoured with ceding screen time to these bizarre creations. John Belushi would refer to them as "the mucking fuppets", often in Henson's earshot. It was clear they had to go.

In the end, they fired themselves: Henson found a new patron in the TV impresario Lew Grade, who brought him and his puppeteers to Britain to work on a variety series at Elstree Studios. Two pilots were made in quick succession, the first of which, The Muppets Valentine Show, was resolutely cosy. But it was the second, The Muppet Show: Sex and Violence, that made the networks sit up. It was risqué rather than outrageous, and Henson described its title as primarily a "humorous hook". But it paved the way for racier material to spring up in the series proper, retitled simply The Muppet Show and shown in both the UK and the US. This included Madeline Kahn's flirtation with Gonzo and Raquel Welch's all-out seduction of Fozzie. Even mild-mannered, cold-blooded Kermit was seen flirting with Cher, Dolly Parton and Lily Tomlin on screen in the Seventies and Eighties.

Of late, a change in Kermit's demeanour has opened a savage rift in the Henson camp. (Explicit puppet sex in The Happytime Murders is apparently fine, but you mess with the icons at your peril.) On one side is Steve Whitmire, a Muppeteer of 39 years' standing who took over as Kermit after Jim Henson's death in 1990. On the other are Jim's children Cheryl and Brian Henson, and the Muppets Studio, from which Whitmire was fired last year after long-standing creative differences turned toxic.

"Steve's performance of Kermit has strayed far away from my father's good-hearted, compassionate leader of the Muppets," Cheryl said on Facebook a week after Steve's dismissal. "Steve performed Kermit as a bitter, angry, depressed victim. Worst of all, in the past few years, he had not been funny or fun. Recasting Kermit is long overdue." Whitmire had played Kermit since The Muppet Christmas Carol: for two generations of Muppets fans he was the character, and Cheryl's appraisal of his work may strike many of them as ungenerous.

Things clearly came to a head during the making of ABC's ill-conceived fly-on-the-wall series The Muppets, which squandered the Kilimanjaro of goodwill created by James Bobin's note-perfect 2011 reboot of the franchise (also, confusingly, titled The Muppets). Bobin's film was an anarchic family musical in which Jason Segel and Amy Adams helped save Muppet Studios from a grasping oil tycoon; the ABC series was a worldly wise adult sitcom, set behind the scenes of Miss Piggy's late-night chat show. The two were bridged by the 2014 film Muppets Most Wanted, whose oddly smirky, grating tone signalled troubles ahead. In 2016, the ABC series was pulled after one season and panned by critics, one of whom described the new Kermit as "one more angsty Hollywood guy in a midlife crisis".

Now a re-reboot looms. While the Jim Henson Company presses ahead with The Happytime Murders and their long-gestating feature Fraggle Rock, Disney is planning a new Muppet Show for its forthcoming Netflix-style streaming service (the studio has owned the rights to the Kermit-and-Piggy-headed stable of characters since 2004). Currently, Disney is searching for a writer with a viable new spin, but don't be surprised if it hews to Henson's original take with atomic precision. After the disastrous recent forays off-piste, the only sensible way to proceed is hand in glove.

This article originally appeared on The Daily Telegraph.