What else effects the decision? I'm trying to come up with something, but it seems to me that publishers are almost always driven solely by money, so if a game wasn't profitable the first time around, why take chances with a sequel?
Well, and this is my total guess here, but the other factor at work is how much will it take to make a game. If a publisher can make the game cheap (i.e., the developer agrees to eat a lot of the cost, it uses existing tech, developer made it out of love, etc.) then the publisher might be more apt to comply.
Plus, the gaming industry is different. Sure, games like Halo 2
will sell millions of copies, but for a PC game, selling 100,000 copies is considered a success. For all the problems with Tribes 2
it eventually sold 200,000 copies, meaning that it broke even (very expensive project due to delays, etc.) and sold enough to greenlight Tribes: Vengenance
Finally, this weird thing happens sometimes when the mere existence of a sequel gets people stoked for it. No One Lives Forever
sold a paltry amount, but just enough to get Sierra interested in a sequel. A ton of people got interested in the game and not only bought NOLF 2
but the original game as well (value priced by then). By contrast, I was never interested in The Bourne Identity
but when the sequel, Bourne Supremacy
came out, I got interested in the first one.