Universal Studios is always going to have a tough time producing a show, just based on the way the park is shaped. The lagoon isn't big enough to compete with the Disney shows, nor will they ever have the airspace to shoot off high-altitude pyro. If I were them, I'd move my daily nighttime show over to Islands and keep the Studios as the event park (concerts, HHN, Mardi Gras, Christmas). This would provide balance to both parks and give each its own core function.
My Island nighttime show would use fountains, fire, and some low altitude pyro to retell the story of how the Islands were discovered/created btw.