Story-based content is what struggles with sequels because it's really hard to both capture the feeling of the original sufficiently to satisfy existing fans while also telling a new story that's interesting in its own right. Being derivative without being too derivative.
I don't think it's ever really been true that video game sequels sucked. Maybe Zelda 2 and to a lesser extent Mario 2 - but game developers seem to break new ground on sequels a lot. In fact I think sequels have been better than originals more often than not throughout game history.
For one thing it may just be more common for the first to not reach its full audience.
But my experience as a game developer is also that, when you start out making a new game, you probably kinda suck at making that game. Games sometimes suck for most of their development until they suddenly get good near the end.
And by the end, you get really good at making that specific game. A lot of game design has to come together to enlighten further game design decisions, and you really come to know what's fun by the end of it. Not to mention the technology you build for it!
A sequel allows the same team to build on the shoulders of the first game, keeping what worked, adding features that players missed and refining those that didn’t work. It’s seen as a safer investment, with an existing fan base to leverage, and so this often leads to larger development and marketing budgets with a focus on growth.
It’s rare for any product to have more success in later invocations than the first edition, that is where the narrative is fresh and strong- and even in the event sequels are stronger, they tend to increase sales of the first season/movie/etc; because people want the whole experience.