Hollywood just sucks in general, it's as simple as that. Sure, they can't make good video game movies, but they generally can't make good movies of any other kind anymore either. The best films to come out of Hollywood were released in 1939 and it's been a long, slippery slope downhill ever since with only a few exceptions.
Another problem is that video game stories are craaaap. Even the best ones. Deus Ex's conspiracy theory nonsense would be laughed out of any cinema if anyone dared make a film of it, the plot contains so many cliches it's as if the writers were having a competition between themselves to see how many tired conspiracy theories they could squeeze into one game. A film based in the Bioshock universe might work (if nothing else, the setting is mildly original) but not if the plot is anything like Bioshock's. Half Life 2 has reasonable characters (except for Freeman of course) but the plot isn't even as good as a sci-fi B-movie from the 1950s. And don't get me started on Halo. The problem with most video game plots is you always end up, in one way or another, "saving/changing the world". Even in the Thief games, the bitterly cynical Garrett somehow always ends up saving the world instead of just robbing it. And "saving/changing the world" is BORING and does not make good cinema. Think of all the films you've ever seen where the world gets saved at the end of it. They all suck, each and every one. Why? Because you know, that as soon as the plot heads in the "world needs to be saved/changed" direction, that the world WILL be saved/changed, and all other outcomes are impossible. The film becomes completely predictable. For example, you know as soon as Bruce Willis hears about the rock heading towards Earth in Armageddon, that he's going to stop it somehow. So any attempt by the director to create 'tension' or 'drama' is pointless, because we already know how the film will end about five minutes after we've started watching it. But when watching a GOOD film, you should never be that sure about what is going to happen next, or how things are going to turn out. That's a value completely at odds with video games where you want to "win", so "winning" becomes the goal, and you know what will happen, you will win (eventually, if you keep playing long enough). This is why the classic, "Academy Award for best picture"-winning movie based on a video game will not happen in our lifetimes. There would have to be a radical shift in video game design methodology for this to come about, which I can't see happening as video games are becoming more and more conservative year after year.