The problem with the whole "videogames should be exploiting their storytelling potential!!!" thing is that narrative and interactivity are basically like oil and water.
Either the game makers are telling a story (through an intro, cut-scene, pre-scripted in-game event, etc), or the gamer is making his own story (by interacting with his environment, seeing how items and entities and the environment interact). Either the gamer is sitting passively watching the plot unfold, or he is doing his own thing. The kind of story in the cut-scenes (stories of personalities interacting, people going through emotions, etc) is fundamentally different from the kind of actions the gamer is responsible for, from the "story" the gamer makes (figuring out the rules of a simple system so that he can out-trick a computer).
So "telling a story" happens at times when interactivity does NOT happen, and vice versa. If the story-telling in the narrative cut-scenes is actually good, then the gameplay just gets in the way. If the gameplay is good, then the cut-scenes don't really add much to it. They're nice, and I like them, but they're not what makes the game good, just as interactivity can not make a narrative good. That's why I said that narrative and gameplay are like oil and water. You can have a game with both, but one does not really help the other much.
For example, the article says "With videogames, the audience takes the teller's baton and continues to tell the story... This way, the game player enjoys the storyteller's thrill, adapting the narrative to his or her satisfaction, while also being the audience for the narrative elements that the game developer provides... We have never had a storytelling medium like video games... Game playing represents the hybrid of both aspects of storytelling, where the audience is empowered to self-propagate the storytelling creation and enjoyment. This stimulates their own creativity and gives them the experience of controlling their destiny... But where does that take us? Video games, as narratives, are not getting better". Right, that's because a narrative is not enhanced by interactivity, it is only paused by it. Either the game makers are telling a story with the gamer watching, or the gamer is trying to complete a challenge while the story is paused.
The exception to this are games that have no real "story", but where the system one masters inside the game is rich enough, interesting enough, complex enough, and similar enough to a real-world system (rather than to a computer simulation of a few entities and a few parameters in a simple environment), where the gamer-generated story IS the story. All that the game-makers want to communicate is stuff that can be "learned" from figuring out the "system" where the game is set. This is the case with Sim City, The Sims, The Movies, and all the Sim Something / Something Tycoon games. These games don't tell a story, they don't narrate, they just illustrate. THAT is the potential that video games ought to explore. Not TELLING stories, but SHOWING stories. Not narrating, not going from beginning to end, but teaching/showing/expressing/illustrating something just through the challenge the gamer must complete, just through the world/system/environment/entities the gamer must learn to influence. This is very different from telling a story. It is almost the opposite of narrative. This is not something a writer can help you with. This kind of art - expressing something about the world and human nature by illustrating it through an open-ended interactive experience - is a whole new kind of art.
It is like a teacher that gives his students an assignment where the assignment does not lay out the things to be learned, but the teacher knows that, while completing the assignment, the students will need to expose themselves to certain ideas, skills, techniques, or bits of knowledge. It's open ended and simple but contains, hidden in it, the requirement to see / learn / realize / think about something. THAT is the future of videogames. And it is NOT telling a story or trying to be a book or movie.
