Stories and games have always had an uneasy marriage. From the beginning, designers have written stories into their games, giving the player a fixed beginning, a narrative path to follow, and a preset ending. At the same time, many players flocked to games because of their lack of narrative structure; a game experience is a chance to create a story, not to submit oneself to a designer's unpublished novel.
At the root of this problem is an almost theological dilemma - can a game designer tell a story if the player's choices actually matter? If the most important element of a game is its interactivity, then every static plot point a designer crams into the experience takes away from the centrality of the player. Put another way, if a game has a spoiler, is it really still a game?
To be clear, with the exception of a few abstract game like Tetris, almost all games benefit from story elements - an interesting setting, a distinctive tone, memorable characters, engaging dialogue, dramatic conflict, and so on. The best games have characters and settings that rival those of any other media - consider GLaDOS from Portal or Rapture from BioShock.
However, the actual narrative of a game - meaning the series of events which determines the plot - is the hardest element to reconcile with the essential interactivity of games. For this reason, narrative cannot be handled as it is with books or movies, in which the story is the core element that everything else must support.