Since I've hopefully grabbed your attention with my wildly sensationalised and misleading title, I perhaps owe it to you to explain what I mean.
I don't actually mean that games are terrible at telling stories outright, but I think there is a lot about their nature that can greatly negatively affect their ability to tell traditional stories, especially from the perspective of someone who isn't used to games.
A problem that often arises with games and their attempts to tell meaningful stories is the problem of ludonarrative dissonance. The idea that what happens in the story is contradictory to what happens in gameplay. But I think this problem has an even deeper level to it. The fact that there is a separation between story and gameplay at all.
"I'm not your errand boy", except you totally are.
As gamers, we're used to having story delivered to us via non-interactive sections of a game that are completely separate from actual gameplay, but therein lies the problem. These two aspects are split apart and have a totally different pace and tone. If we look at the game as a method of storytelling in a holistic way, it completely screws with traditional storytelling pacing. After all, when we take control of a character in a gameplay sequence, is it not technically also part of the story? Most games are not like Braid or Catherine, where what you actually play has very little to do with the narrative being delivered, rather it's all part of a constant sequence of events. When Booker DeWitt and Elizabeth stop yapping at each other and people start shooting at them, it isn't suddenly a completely different piece of entertainment, the characters have simply come across other minor characters in the story that want them dead.
Consider what that means over the entire story of the game. It means that for most of the actual story is spent covering extremely drawn out and mostly inconsequential action sequences. Imagine if the balance between action and character moments of your average shooter or action game was translated in to a book or a film. In a book there would be pages and pages of nothing but tedious details, like whether the protagonist was able to shoot a certain enemy, and every occasion that he had to reload, or take cover, etc. It would take up the vast majority of the book too, and most people would call it terrible. The same is true for film. People would get tired out and bored with the constant action, most of it with utterly no meaning. If we decided to add the camera angle usage of games in to film too, things would be made even worse. People would not stand for it.
This is why I think a lot of people who are not familiar with the medium struggle to understand it and take it seriously, in at least a narrative sense. To them something in which you spend the vast majority of your time trying to overcome some kind of test of skill that has absolutely no significance in the actual plot severely damages the impact of said plot. It would be like if The Big Lebowski was 10 hours long, 9 of which filled with nothing but The Dude just bowling.
This guy is the final boss.
This doesn't mean that games are awful at storytelling though. Of course not. There are many games that do a brilliant job. But our medium is still young and I think a lot of games try to stick to this traditional method of storytelling when a different method is probably better suited. Some of these games that do it this way have actually delivered brilliant stories, but I still often can't shake the feeling that it's an unfitting method. That the separation results in the feeling that little bits of movie are being forced in to a game, thus accentuating how separate story and gameplay is in many games, and how much gameplay simply as an entity in and of itself is detrimental to this storytelling method.
That's not to say that gameplay is bad, or that story should take precedence over it. On the contrary, gameplay should always be the most important aspect of our medium. It's just the method many games use to tell stories creates an abrasion between the two. As experienced gamers, this does not tend to faze us, but to those who are not comfortable with the notion of gameplay, this drastic dichotomy is much more readily apparent. Thus they find it much harder to reconcile these two separate aspects of the game as being part of a singular, coherent experience.