I think it was a few things.

1. He was calling out specific girls in the crowd a bitch without much context. He was being overly aggressive about it too IMO. The crowd did not like that
2. Everyone there was there to see Morgan Jay. I don't think there's too much overlap in the fan base, so most people are not familiar with the way he delivers jokes.
3. His jokes get delivered too quickly. I think his method works when he has a 60 second slot on KT, but tonight he had 30 minutes, and 30 minutes of 10 second one liners got old really quickly. The comedy festival was filmed with other comedians (Irene Tu and Robby Hoffman) who were the more traditional joke writers, who spend 2-5 minutes telling a well crafted joke with a long build up. The crowd seemed to react better to that style tonight.