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Game Culture Examiner, Zoran Iovanovici, had a fascinating article about a list of awesome games that never had a direct sequel. Most of the article is a familiar call for the video game industry to focus on more innovative titles.
My repsonse to that is....no. Granted, the list is full of great games that only has one title in it's existence, some of the best games in history are sequels. And the industry knows we love playing sequels and we can't stop buying them.
I personally have no beef with sequels because I don't think they're all yearly updates with no heart and a need for cash. Some updates are a chance for most developers to improve on ideas and designs that might of had small flaws the first time around. And in this day and age of gaming, studios making more money isn't a bad thing.
And not a lot of the games on this list disappeared forever. Ico had an indirect connection to Shadow of the Colossus, storywise. And Ikaruga was codenamed 'Project RS' in honor of Radiant Silvergun.
So this list will be full of games and franchises that got better as time went along and technology got better. And best of all, it didn't ruin any memories of the original and it has no particular order.

Super Mario Bros. 3 (NES)-For a long time, this was considered the best Mario game ever and for good reason. Not only did it add the ability to fly, which expanded the scope and depth of each level. It also added some creative looking levels, enemies, powerups and secrets, giving the Mario franchise staples for each subsequent game. Did it ruin anything about the original? Absolutely not as the original Super Mario Bros. is still considered one of the best games ever made.
Mega Man 2 (NES)-It took the tough difficulty, rock-paper-scissors boss battles, and awesome design and was turned into a classic game and gave Capcom one of it's earlier blockbusters, a franchise that's still going today. Did it ruin the original? Not completely but it isn't that remembered all that well.
Tecmo Super Bowl (NES)-It took the original gameplay of the NES (simplified play selection, overpowered players, specific team play) and expanded to all 28 teams and having a full 11 team roster. It also added some kick ass cinemas for kick ass plays and season play with playoffs and stat tracking. And it still played just as fast as the original. Did it ruin the original? Probably. While nothing was better than having Bo Jackson run for daylight on any play, it's better having an Neil Smith always blitz up the middle and take down anyone in the backfield.

Resident Evil 4 (GC)-While each main Resident Evil game was a critical and financial hit, it always felt clunky to play due to its controls. While the first REmake on the GC took the detail into creepier heights, the fourth one finally nailed the mechanics down and turned into one of the best games ever. While the game was still creepy and could terrify people, it didn't do it by creature design alone. What most of the bosses can do was quite scary. The game didn't want you conserve ammo, it wanted you to layout entire villages. And that was the beauty of its design: it was a game you could enjoy and play over and over again. Did it ruin the original? Yes, thankfully as the upcoming Resident Evil 5 borrows the same mechanics of 4
Super Mario Galaxy (Wii)-This isn't a knock on Super Mario Sunshine's design and tropical setting, but Galaxy just buried Sunshine due to its startling variety and simplified control scheme. It took the bite-sized gameplay of SMB 3 and combined it with the exploration of Mario 64, giving Wii owners of its best games. Did it ruin the original? No! Go read the SMB entry why.
Super Metroid (SNES)-A great Nintendo game that Shigeru Miyamoto didn't touch but it took the concept of a world that always expands to an legendary degree, filling it with secrets and powerups that begs for replayability. This sequel was so good that it nearly took eight years for a new game to even come close to Super Metroid's pedigree. And it did it without throwing away everything that happened in the first game. It also has one of the best video game soundtracks ever. Did it ruin the original? Nope, not even close but Super Metroid just contained so many gameplay ideas that it was used in the Metroid: Zero Mission remake.

Street Fighter II (ARC)-More proof to never stop at the first game, this sequel only retains Ken, Sagat, and Ryu and gave birth to the fighting genre. It expanded the character list, moves, and added head-to-head play, which is still balanced enough to make it playable to this day. Did it ruin the original? Yes! By giving the characters more moves and making those moves easier to execute, it's hard for anyone to go back to the first Street Fighter.
Splinter Cell: Pandora Tomorrow (XB, PS2): While the single-player campaign didn't do anything different than the last game, this game added one of the best online multiplayer modes in recent history, bringing the complex control scheme of the adding game and adding it online and turned into an intense and addictive thrill ride. Did it ruin the original? Not really.
The Legend of Zelda: Ocarina of Time (N64): While the framework has more to do with A Link to the Past, just seeing that framework being used in 3D was exhilariting and it also made the combat a lot more engaging, the hidden secrets worth searching for, and giving the Zelda franchise some maturity and gravitas, making it feel like the epic series it should always be. Did it ruin the original? No. Nothing ruins an original, but it set a bar for subsequent 3D Zelda games that feels tough to cross.
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Metal Gear Solid 4: Guns of the Patriots (PS3): Yes, this game is more movie than game at times and the boss battles are nowhere close to being as memorable as the first Metal Gear Solid and MGS4 nearly collapses under the weight of its own ambitions. So why am I putting this one on the list? Because for the franchises talk about the use of modern technologies and weapons, this is the first game where the control scheme felt modern, as past MGS games had overly complicated controls and were never truly 3D. While each game has always encouraged sneaking, this one finally let players feel rewarding for using their shiniest guns. Does it ruin the original? No, it just made some of the high points of the first MGS better (voice acting, boss battles, plot).
Panzer Dragoon Saga (Saturn): This entire game is such a rarity in every respect. It took the transforming aspects of its combat and put it in the RPG genre and it was a great fit, giving (a few) gamers one of the best games to ever come from Sega. Does it ruin the original? No way, each entry in this franchise was amazing.
Burnout 3: Takedown (PS2/XB): Yes, there were two before this one but none of them ever felt as fast or looked as pretty as the third one. With higher production values, simple control scheme and online racing, this took the franchise to incredible heights and has served as the benchmark for subsequent Burnouts. And it made other car racing games seem slower. Did it ruin the original? Yes. The franchise just got prettier.

Soul Calibur (DC): The original Soul Edge/Blade was written off as nothing more than 'Tekken with weapons' and even then, 3D fighting games still existed on a 2D plane of fighting. Not after this one. This is still one of the best looking-games, it gave 3D fighting games something that only existed on Virtua Fighter: Depth. It had enough flash and simplistic execution for button mashers and a great, complexity that allowed for more experienced players to enjoy intense battles. This game turned the 'Soul' franchise into one of the best in the game industry and buried Tekken's status as Namco's premier fighting franchise. Did it ruin the original? With the addition of 8-Way Run and Guard Impact, yep.
Halo 2 (XB): While the sequel retained the epic, large-scale battles from the first game, it added something very important: online play. While not revolutionary on it's own, this addition gave Microsoft their trump card for the Xbox 360 and helped cement online play as integral to this current generation of video games.
Call of Duty 4: Modern Warfare (XB360/PS3): Not only did this version take the FPS genre out of the space alien/WWII rut it had fallen into by putting it in a refreshing, modern setting. COD4 added, quite possibly, the best online gameplay ever. Not only is it intense, varied, and addictive, it added RPG elements, allowing people to add rewards and perks, giving anyone the greatest incentive to play a FPS game online, which are usually the realm of hardcore players. Did it ruin the original? Yes. Despite World at War's best efforts, it's hard to go back to WWII. And when you earn points for playing and killing, it's hard to just play online for s***s and giggles.

Grand Theft Auto III (PS2)-How did I get this far without mentioning the epitome of expansion. It took the varied gameplay of the first three Grand Theft Autos (1,London, 2) and stuffed into a 3D city where fun gameplay could occur at any moment. From escort missions, races, taxi driving, and delivery gigs, there was just so much content stuffed in this game and it couldn't have been achieved in it's original 2D form. And let's not even begin to imagine where the industry would be without the birth of the sandbox genre.
Tony Hawk's Underground (PS2/GC/XB)-This claim may not mean much, but this is the best version of Tony Hawk skateboarding, taking its great control scheme and then-vaunted customization and gave its magnum opus before the franchise nearly collapse. This was the last time where the franchise did no wrong every year.
Mario Kart DS (DS)-While it took the series online (in some form), the gameplay finally achieved balance, which meant if you lost, you lost to someone who knew how to play and had some skill. And nearly all the additions (Bullet Bill mainly) actually err..added something to the game without ruining the balance.

Final Fantasy VII (PS): While many writers and fans will always find better FF games, none of them can match Final Fantasy VII's importance and ambition. It turned Square into a top-notch publisher and the Playstation into one of the best-selling consoles in history. And legions and legions of die-hard fans for life. A lengthy quest, with an ambitious story full of some memorable characters and great music.
Castlevania: Symphony of the Night (PS): One of the best games in existence, it took the series away from the linear format of past Castlevanias and used the Metroid formula, creating a sprawling castle full of secrets and powerups that made the journey a lot more important and fun than the destination. It also became the standard by which all later Castlevanias are developed.
Phantasy Star IV (Gen)-Sega's premier RPG series on the Genesis and Master System, this franchise had huge quest, huge maps, and was obscenely difficult. The fourth (and final game of the original series) ditched some of the more difficult parts and made to worlds less sprawling than previous games, becoming a tighter and more focused quest. Did it ruin the original? While the first game was still a landmark game, it just feels supremely dated. The fourth one holds up better.

Silent Hill 2 (PS2/XB): While the first game was treated like a Resident Evil knockoff, this game took the series from a B-movie zombie blaster into a psycological thriller, that was far more creepier and disturbing than any Resident Evil game and had an incredible plot and setting, where most of the creatures are just twisted figments of the protagonist's state of mind.
Madden NFL 2005 (PS2/XB/GC): The poster child for a case against sequels, this was the rare case when I felt Madden actually felt perfect and truly felt like real football. It had enough AI on both sides of the ball to make both sides rewarding and using as second analog stck on defense led to turnovers, keeping high scoring affairs to a great minimum.