I believe fans will tell you that it means there was a huge mishandling of distribution, promotion, and advertising on Interplay's (the distributor) part which lead to the poor sales. ... At the time, most people had no idea there was a sequel when they were total fans of the first game.
Yes, fans will tell me that

. But it's never that simple. The fact is, none of these things depend entirely on the distributor. It's a big challenge to get a game in stores - today, a game like FS2 would be a big success because it would get a digital release, but back then, it was genuinely hard. You have to understand, from the prespective of a brick-and-mortar store, with limited shelf space, it's far better to have forty copies of the current best-seller on the shelves, than to have one copy each of forty different games. If your game is not promising enough, and you want it to have more shelf space, the big question stores ask is - "what's in it for us?".
The same goes for promotion. Two years ago, I went on a press tour to promote the air combat game I was working on at the time (Combat Wings - ultimately published as Dogfight 1942). Prior to this press tour, the dev team had a pretty bitter relationship with the marketing department (even though we were all in the same company) - we all thought that the marketing department is basically ignoring our game, concentrating all their efforts on another title, and that our title would ultimately fail because of their laziness. Not much changed after this press tour for most of the team, but for me - well, what I experienced blew me away. The marketing team had arranged dozens of meetings with the press, in Europe, the UK, and in the US. Two weeks of travel, day after day of meetings. And you'd think that from the dev team's perspective, the conditions were positively ideal - there I was, the game's creative director, with full and total control of the message we were driving across to the press. I was making all the presentations, after all. And hey, we felt we had a pretty good game - rough, unpolished, but overall pretty good. But there was no real story in it, just like Freespace.
Do you know what the result of this press tour was? Precious little, actually. Time and again, the press seemed pretty happy with what they were seeing. They enjoyed playing the game. They asked questions, they were interested. But we got very, very little press from it. The online outlets usually published a short preview, some indeed very positive; all the printed press, however, utterly ignored us. They liked the game - but there was nothing about it to warrant using up even half a page in print. Paper is limited, you know.
I can imagine Interplay having the exact same experience - only worse, because back in 2000, the printed press was huge, while the online press... not so huge. And trailers! Today, trailers are the mainstay of marketing, precisely because the internet allows us to access an unlimited number of trailers. Back then, you could either download a trailer (hours, and hours - you'd really only do that if you were already interested in the game), or you'd see the trailer on a TV in a store. But why would a store waste precious time with an FS2 trailer, when they could spend all day showing the trailer for Quake III, Medal of Honor, or whatever else the big hits at the time were?
So, what did FS2 have going for it? Check out its features, which I'm paraphrasing (in a slightly sarastic manner) straight from the
original box art:
That big enemy you had in the first game - well, they're back! And they're bigger! Whoa, that force that almost destroyed you previously, it was just a scouting party! The game features nebulas which
add a new dimension to the gameplay (whatever). There are gas mining ships in the game (uhm, not excited). There are fighters, and corvettes, and the enemy has bombers, and turrets (yeah... really?)... and two kilometer-long capital ships! Wow! Twenty weapons! 30 missions! 70 new ships! Beam weapons! And a mission editor! Don't get me wrong. All of these things are interesting to someone who is already excited about the game. If I'm excited about FS2, I'll be even more excited knowing there's as many as seventy new ships in there, and cool new weapons and stuff. But
none of this has the potential to make me excited about the game in the first place. If a player who doesn't really have that much interest in space sims were to pick up the WCP box, he'd see Mark Hamill, and live actors and stuff - hey, that looks interesting. If he picks up FS2 - he won't care. All the features listed on the box are clearly aimed at people who really liked the original - and that's not a huge crowd.
Yes, the game was highly praised for great dogfights, great graphics, and so on. But when you're making a space sim or a flight sim, if you want to achieve mass market sales, you need something that appeals to the mass market, something that people who are
scared of such games can relate to. And people are scared of such games, you know - everyone wants to be Luke Skywalker, but the moment you tell them about a game that tries to recreate fighter dogfights, they start unconsciously backing away, because of the perceived complexity. The word "simulator" in particular is frightening. Most people would rather stick to first-person shooters. You can counteract this with a big, bombastic story, like Wing Commander did - or by tacking onto a big franchise, like the X-Wing series did. Without either of these things, you're stuck with low sales, and it doesn't matter if you're a young upstart company with a small publisher, like in the case of Freespace, or if you're world-famous Chris Roberts with all of Microsoft's marketing power behind you, like in Starlancer's case. It's just a very difficult genre to achieve massive sales in, and nobody is going to spend massive amounts of money on marketing unless they have some hope of achieving good sales.
Anyway who was complaining about story enough to hurt sales? I don't remember that ever being said at the time. Most reviews at the time were highly favorable, in fact, praising its story.
Actually, even reading through the very rough summary of the game's reception on Wikipedia shows that both the sequel and the original games were criticised for the impersonal story, the argument being that it was ultimately difficult to connect to the player character. Yes, the reviews said the events depicted were great and all that, but they did not like the impersonality of it.
But that's not even the point. The problem with Freespace's story is not that people hated it. The problem with it is that people didn't care. Here's a sample conversation kids
never had:
"Hey, who do you want to be when you grow up?"
"Man, I wanna be Alpha One!"
I mean, read through any of those "greatest character/enemy/whatever of all time" polls. Blair, Spirit, Thrakhath, the Kilrathi - they show up. Nothing ever shows up from the Freespace series. Not even the Shivans, because ultimately, you know, they're not that memorable - they have no real resonance, they're just the usual cliche - a deep, dark alien race that wants to destroy everything for no apparent reason. Yes, they were a far better implementation of this cliche than WCP's Nephilim - but it's still one of the shittiest and least exciting cliches of pulp science fiction, because we, as people, cannot ultimately relate to a story unless it revolves around characters. The Shadows, the what''s-their-name from Star Trek: Voyager, the Nomads from Freelancer, et cetera, et cetera -
no one ever gave a shit about any of those.
The point of all this, is that Freespace 2 failed when it came to that ultimate marketing tool - word of mouth. The first Freespace achieved a mild success, because of word of mouth - but ultimately, only because Wing Commander Prophecy had been released a few months earlier:
"Hey, I just played Wing Commander Prophecy. Cool game, but the aliens kinda sucked."
"Yeah, I know. But listen, I just played this other game, Freespace. They did the alien thing way better than Prophecy did."
"Really? Ok, I'll check that out."
A year later, this strategy simply could not work with Freespace 2. About the only way they could have achieved good sales, ultimately, would have been on the back of another outing for the dull-and-unimpressive Nephilim in a new Wing Commander game...
Man, I've wasted a lot of time on this post

. Just one thing to add in conclusion - and I'm kinda repeating myself with this - I'm not disparaging the Freespace series. They're great games. But there are very concrete reasons why they failed to achieve success. Freespace fans would do themselves a favour in acknowledging that no, it wasn't a case of the world failing to recognise the greatness, but rather that the games simply contained a fundamental flaw that made them uninteresting to most people, except perhaps as a foil to another, story-based space-sim.