spindown: To me, it's because sequels are often lazy cash-ins on a successful original concept. A sequel doesn't have to be radically different, but they often use the same assets as in the original game. Therefore, typically a lot less effort is put into making the sequel. If a sequel is nothing but a set of new maps or levels for the original game (maybe with slightly improved graphics), then it's not a proper game in its own right but more like an expansion. That doesn't mean that the sequel is necessarily bad, but it's certainly not worth paying the full price for in many cases. A good sequel takes what was successful about the predecessor, but adds something significant that gives it its own character instead of being just more of the same.
That's a good list of the reasons for making poor sequels, which most sequels are. Cash in as cheaply as possible on the part of the market that will settle for more of the same.
The proper reason for making a good sequel has been known for a long time. It is to strengthen the bond between the author and his audience (readers, gamers, whatever), so that the audience will better appreciate (and pay more for, and demand more of) the author's work. This gets amusing when an author wants to end a series, but the public will not accept it; that's how Sherlock Holmes, Hercule Poirot, and others get killed off and resurrected.
There's also the authorial ego that no one dare puncture, such as George Lucas and the overextended
Star Wars series (and the otherwise inexplicably repeated presence of Jar Jar Binks), or Douglas Adams's one-novel-too-many
Hitchhiker's Guide series. But that is a bad reason for making a bad sequel, and unless the author is independently wealthy, it means the demise of the series.