Michael Ende's lovely book is in two parts; Petersen's 1984 film is really just the story of Part I. It's very good all the same. Admittedly it would have been nicer if Petersen had made a four-hour film covering the entire book, but Part I's story is complete enough and works on the screen. Besides, there's always the possibility of a sequel.
Which makes it all the odder that the sequel, when it came, did NOT continue the story in the way that Ende had. Oh, Miller and his writers mine what's left of the novel for ideas; what emerges is a gross caricature of Ende's work, a hideous, twisted, traducement. Making the witch Xayide into too big a villain is the central mistake. In the book Bastian's problem is a deep one: wishes take away his memories not because of the contrived plotting of some super-villain, but because of the very nature of the world Bastian finds himself in; because of the nature of wishing, really. Xayide EXPLOITS this fact; she does not create it. (Note that in Petersen's film the central villain also exploits rather than creates strife.) Quite apart from this Xayide is much more chilling in the book. In the film she's a cackling, cretinous vamp who wears ludicrous bird-of-paradise gowns. She's a stage villain of the flattest kind.
One small change is more damaging than you might at first think: in Ende's book, Bastian doesn't leave Fantasia ("Fantastica" in the translation I read) until the very end. This makes more credible his chances of being trapped there. Bringing him back to our world for the start of the next film is enough to make the entire subsequent story silly and enervating. It feels as if we have entered a sitcom: at the start of the next episode, everything is as it was before. In today's episode Bastian must learn a Valuable Lesson About Life - coincidentally, the same one he learned yesterday (and will probably have to learn again in the next sequel, the dullard). The first scenes of Part II are almost unbelievably bad. I almost admire Miller's willingness to ADVERTISE how bad his film will be. We open with one of the cheesiest sequence of allegedly humorous pratfalls I think I've ever seen; in a matter of MINUTES, I lost faith in the film, as had everyone I was watching it with.
And so much of the original talent is missing as to make the whole exercise pointless. The crew is almost entirely different; the cast - apart from Thomas Hill as Cornelius, who puts in an appearance even though he now has no role to play in the story - is different and vastly inferior, and all the beauty and fantasy that infused Petersen's production design is missing. It's not that the special effects are TECHNICALLY deficient, although they may be. It's just that there's no vision to give them life. When I see the turrets and drawbridges I find myself think of garage roll-a-doors and hydraulic lifts, for that is what they look like here. The script is full of such clunkers you'll be unable to avoid wincing ... unless you treat it all as a joke, which, luckily, is my siblings and I decided to do. Treat it as a kind of "Plan 9" experience and it may be worth watching.