I don't think 1886 'failed' because it was too cinematic, it failed because neither the cinematic or interactive elements were particularly good (at least in my opinion). Had the story been better executed and felt more complete, and had the gameplay been more interesting, its current cinematic/gameplay ratio would likely have been fine with its target audience (though of course, those that dislike cinematic games would have complained regardless :p).
Anyway, no, i don't believe there's any inherent limit to how 'cinematic' a game can be (outside of literally being a film). As long as you can back those cinematic/story elements up with a solid interactive foundation (even if a very simple one, like in The Walking Dead or Steins;Gate), you're good to go.
On an individual level though, sure, as with all things there are limits. If you want to reach as large an audience as possible, finding a balance would usually be wise.
