Here lets look at why Red Steel 2 really failed.
The first game Red Steel sold almost entirely because it was a launch title for the Wii. Gamers had very little software selection and therefor purchased Red Steel. Red Steel was not only a launch title it was the first and only shooter for the Wii giving it a major leg up over the other 4 launch titles. Since Red Steel 2 is not a launch title infact it wasn't even a motion plus launch title it got delayed and now motion+ is something of the past.
Second is obvious, with 1.20 million people having owned the first game and noticed how poor the game was in the quality department why would anyone buy the sequel. This leads to a ton of consumers not willing to shell out the coin for Red Steel 2 and in turn that leads to way lower sales. The game also changed the art style which may have turned off a few of the consumers who actually liked Red Steel.
Three and obviously has to be advertising, I haven't seen many Red Steel 2 ads infact I saw more Conduit ads. The hype train here on VGChartz wasn't as big either. With less hype and less advertising what do you expect. Of course Nintendo did push it at E3 but thats not enough.
Lastly to say The Conduit was a failure is sort of wrong. I mean seriously breaking the 300,000 mark is not a failure. The title was low budget and the sales were more then enough to turn a profit. Its funny that if a title doesn't reach a million people automatically call it a failure when a million is a massive success.
Long story short I think the next Red Steel will be on the Move or a future gaming platform. These sales are way to low for UbiSoft's standards!