They couldn't recapture the key reveal of the Matrix. It would be like doing a sequel to "The Sixth Sense"--tag line: "He's Still Dead". And without that, it's just another action movie except "bullet time" is no longer innovative.
Their solution was to go deeper into the mythology and the larger world, but that was never going to be as fresh as the original.
I would have done a time-jump and have Neo be the mentor figure to a new Neo (a Neo-Neo). They'd still be fighting the Architect (and maybe Smith) and they'd still explore the larger world of Zion + Machine City, but the key reveal would be that Neo himself is just a program (like the Oracle).
But what do I know? I'm just a simple programmer.