There's nothing more awkward than Pokemon fans finding out that the sequel for Detective Pikachu got scrapped eight months after the fact. Despite the fact that Justice Smith, who plays Tim in the movie, told reporters last May that he'd be interested in a sequel but suspects one will never happen, a lot of the Pokemon fandom only found out about this a couple of days ago when the interview went viral on Twitter. People seem disappointed at the prospect that a sequel will not arrive, and given the movie's success, perhaps that's understandable - but Detective Pikachu's story has already been told.
These expectations make sense. Legendary Entertainment that the sequel for Detective Pikachu was in the works four months before the first movie even hit theaters. Two years later, Smith commented that he and the rest of the cast and crew had to "bury our hopes " on the sequel ever seeing the light of day, though he still holds a candle for it. I love Detective Pikachu just as much as everybody else — and that's on Ryan Reynolds — but I'm in the camp that believes that the sequel isn't really necessary.
The best and only reason I could give as to why the Detective Pikachu sequel got scrapped is that the original movie had an ending that was too wholesome to warrant it in the first place. Perhaps Pikachu's big-screen debut breaking the video game movie curse and generating $54.4 million in the US box office on its opening weekend made fans assume that a sequel was guaranteed in the foreseeable future. Sonic the Hedgehog made $58 million in the same time period, and has a sequel due out this year. However, a film's box office successes do not always a sequel make, even if it was planned out far in advance.
While there are some differences between the movie and the Nintendo 3DS game it was based on, the plotline remains the same. Tim Goodman, a 21-year-old insurance agent who is three years older than the game's human protagonist who shares his name, finds Detective Pikachu in his father Harry's apartment in Ryme City upon finding out that he had gotten killed in a car accident and is shocked to discover that Pikachu could talk — to Tim, at least. Pikachu explains that even though he lost his memory following the crash, he believes that Harry survived because the police never found his body despite Detective Hideo Yoshida revealing video footage to Tim showing the contrary. During the course of the investigation into the purple gas that is causing the Pokemon to go berserk all over Ryme City, Tim and Pikachu learn from Howard Clifford, founder of Clifford Industries and Ryme City, that Harry was abducted by Mewtwo. It was also Mewtwo who erased Pikachu's memories of the crash. After traveling to an engineering lab where the R gene was being experimented on Mewtwo and getting attacked by an army of Greninja, Pikachu remembers rescuing Mewtwo from the lab and, in a state of disbelief over the crash being his fault, discovers that the Greninja caused the car crash, not Mewtwo, who only healed Harry.
Back in Ryme City, we discover that Howard is the ultimate villain of the story, and was experiementing on way to merge his mind with Mewtwo's to gain its power. Mewtwo saves Tim's father with a similar power, fusing Harry's consciousness into Pikachu's, allowing him to speak to Tim in English but only say "Pika Pika" to everyone else. After Pikachu battled the mind-controlled Mewtwo in the middle of the parade in the city, Mewtwo separates Pikachu and Harry, and Tim finally reunites with his father in his normal body. From there, Tim tells his father that he has decided to stay in Ryme City to become a detective and spend more time with him and Pikachu, who now speaks in his original Pika language.
Mewtwo separating Pikachu and Harry's bodies towards the end of the movie and the heartfelt reunion between father and son after years of estrangement didn't give any clear indication that there would be a sequel. Tim was with his father throughout the film, only Harry was trapped inside Pikachu's body for protection. Even though Legendary Entertainment planned the sequel out before Detective Pikachu's release, it doesn't make any sense to produce it now because the original movie ended on a high yet solemn note. The Pikachu that would star in the sequel would be a Harry-less Pika, and therefore a completely different character.
At least there's hope for a Detective Pikachu sequel on the Nintendo Switch. The Pokemon Company teased the follow up to fans in a tweet back in 2019, but nothing more came out of it. Its existence was only revealed by a game reviewer wh𒈔o discovered "Untitled Detec♌tive Pikachu sequel" in the Switch games library as he was summoning monsters in Monster Rancher 1 & 2 DX. Whether The Pokemon Company will follow through on that game or cancel it altogether is anybody's guess.