When The Legend of Zelda: Twilight Princess launched cross-platform for the Wii and GameCube in 2006, it fulfilled the wishes of many fans who wanted a more mature Zelda game. Ocarina of Time, and Majora's Mask especially, had been fairly dark in theme and art style, while Wind Waker was initially maligned for its cartoonish graphics and vibrant colors. Twilight Princess proved to be a massive success, selling many more copies than Wind Waker, and seemingly proved that a realistic and serious design was the future of Zelda.
Twilight Princess was actually so successful that many of the developers quickly began working on a direct sequel to the Legend of Zelda game, intended to be a side story similar to how Majora's Mask relates to Ocarina of Time. However, the project was sidelined so a play test could be developed for what would eventually turn out to be Link's Crossbow Training. Shigeru Miyamoto wanted to make a Zelda game that could utilize the Wii Zapper, a peripheral designed to house the Wii Remote and Nunchuck for playing shooters. He promised the Twilight Princess dev team that if the prototype game bombed in a focus group test, Nintendo would switch gears to the sequel that had already started being designed. The Crossbow Training was a massive success in play tests though, and Miyamoto's vision became a reality, with a Twilight Princess sequel never seeing the light of day.
The information comes from a video by DidYouKnowGaming on YouTube about different Zelda games that never completed development. A sequel for Crossbow Training was also pitched, hoping to introduce competitive multiplayer and possibly a first person perspective, but was rejected by Nintendo. Other sequels, such as a follow-up to Wind Waker on the Game Boy Advance and a third Four Swords game on the DS, never got off the ground either.
A Direct Twilight Princess Sequel Could Have Been Great
The Hyrule of Twilight Princess is large and sprawling. It's not quite as openly vast as the Great Sea in Wind Waker, but the setting certainly could have introduced new territory for a Twilight Princess sequel. After all, a whole other land akin to Majora's Mask's Termina could have been invented if necessary. Twilight Princess features some of Zelda's best dungeons, and introduces creative items very late in the game, where their use is limited. A sequel might have allowed for some of the late game ideas to be more fleshed out or used in new ways.
This is especially true for the Double Clawshot, which was given to the player in the game's final dungeon before Hyrule Castle and was so fun that it should have been given the opportunity to be used in more instances. Fans had to wait five years to get their hands on the item again when the Double Clawshot reappeared in Skyward Sword. It's unfortunate that the Twilight Princess sequel never came to fruition, considering the compelling narrative options dealing with Midna and the Twilight Realm, and it's even more disheartening to hear that it never happened because it was usurped by a shooter spin-off.