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Kinect 1 didn´t work.

It plain and simple wasn´t functioning like it was supposed to do.

100% body tracking just doesn´t work for traditional games, think about it:

  how does your typical 3rd person/first person protagonist behave in your standard game ?

Jump, Swing/Shoot your weapon/Sword, Move around (!), Climb etc.

Those actions are absolutely not transfarable to a Kinect-only game, the traversal alone is almost impossible to replicate with Kinect so you end up with on-rails games like Fable:The Journey.

Kinect doesn´t work with games that demand precision and games that have you moving your character.

Heck, the Wiimote and the Playstation move are far better, Shooters play like a charm on them.